Cybersquatting – Attorney Evan Brown

September 29, 2024 Contracts, Cybersquatting, Licensing, Trademarks

Counterfeit lubricant case gets preliminary injunction based on defendant’s slick conduct

A German-based lubricant manufacturer sued a U.S.-based distributor, alleging that the distributor produced and sold counterfeit versions of its products with branding that closely resembled plaintiff’s trademarks. Plaintiff brought claims for trademark infringement, cybersquatting, unfair competition, and other related violations, moving for a preliminary injunction against defendant, which the court granted.

The parties initiated a business relationship in 2019, but they never formalized a distribution agreement. Although plaintiff sent a draft agreement outlining trademark rights and restrictions, it was never executed. Plaintiff asserted that the relationship involved a limited license for defendant to distribute plaintiff’s authentic products, but defendant registered a “GP” mark in the U.S. without plaintiff’s consent. According to plaintiff, this was an unauthorized move, and defendant falsely represented itself as the mark’s legitimate owner.

Plaintiff further alleged that defendant continued to produce and sell lubricants with packaging mimicking plaintiff’s design, misleading consumers into believing they were purchasing legitimate products. Defendant also registered several domain names closely resembling plaintiff’s, which were used to display content imitating plaintiff’s branding and operations.

The court found plaintiff’s evidence of irreparable harm and likelihood of success on the merits compelling, issuing an injunction to stop defendant’s operations and prevent further distribution of the alleged counterfeit goods.

General Petroleum GmbH v. Stanley Oil & Lubricants, Inc., 2024 WL 4143535 (E.D.N.Y., September 11, 2024).

April 15, 2024 Cybersquatting

Does renewing a domain name count as “registering” a domain name under the ACPA?

ACPA

The Anticybersquatting Consumer Protection Act (“ACPA”) is a federal law – part of the Lanham Act that deals with trademarks and unfair competition. It says that a person can be liable if he or she registers a domain name that contains another’s distinctive trademark with a bad faith intent to profit from that mark.

One issue that has arisen over the years is whether registration that can give rise to liability means only the first time the domain name is registered, or whether it applies to the re-registration, e.g., each year when the registration is up for renewal with the registrar. See this case from earlier this year where the court held that renewal was not registration.

The various federal circuits are split over the issue. At least the the Third, Fourth, and Eleventh Circuits have all concluded that the ordinary meaning of the word “registers” necessarily includes both the first registration and any subsequent re-registrations. The Ninth Circuit has held that Congress meant “registration” to refer only to the initial registration.

The Second Circuit does not appear to have weighed in on the question. But a recent district court sitting in the Second Circuit sided with the “re-registration is registration” take from the Third, Fourth and Eleventh Circuits.

In the case of We the Protesters, Inc. v. Sinyangwe, 2024 WL 1195417 (S.D.N.Y., March 20, 2024), counter-defendant registered the disputed domain name in 2015. The issue was whether the re-registration of the disputed domain name in 2023 was a registration of a distinctive mark done in bad faith. This passage of time was important because it gave the arguably descriptive mark MAPPING POLICE VIOLENCE enough time to become distinctive.

Concerning the word “registers” in the ACPA, the court applied its ordinary meaning, noting that it was not the province of the court to add words to statutes that Congress enacts. “Had Congress wished to restrict the word ‘registration’ as used in the ACPA to initial registrations, it surely knew how to do so.”

We the Protesters, Inc. v. Sinyangwe, 2024 WL 1195417 (S.D.N.Y., March 20, 2024)

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April 8, 2024 Cybersquatting, Trademarks

Sprint puts an end to entrepreneurs’ efforts to revive NEXTEL brand

abandonment — This house is abandoned but the NEXTEL mark is not.

Plaintiff Sprint (owner of the NEXTEL brand) sued defendant business owners, asserting claims for trademark infringement, cybersquatting and counterfeiting. Beginning in 2016, defendants – apparently believing that Sprint had abandoned the NEXTEL mark – began selling cheap cell phones branded as Nextel devices, and operating websites lauding the brand’s “revival”.

The question of defendants’ liability for infringement of the NEXTEL word mark went to a jury, which found in favor of plaintiff. The jury rejected defendants’ argument that Sprint had abandoned the NEXTEL mark.

Defendants sought review of the jury’s finding of no abandonment with the Eleventh Circuit Court of Appeals. On appeal, the court affirmed the lower court’s judgment.

The court examined how abandonment is a defense in trademark infringement cases, requiring discontinuation of a mark’s use with no intent to resume. Trademarks must be used genuinely, and the Lanham Act provides that three years of nonuse is prima facie evidence of abandonment.

The court concluded that the evidence showed Sprint’s continuous use of the NEXTEL word mark. For the three year period that defendants claimed Sprint had not used the mark, Sprint had provided evidence that the mark was used on at least two products. This continuous use also undermined defendants’ arguments against the cybersquatting claim.

Sprint Communications, Inc. v. Calabrese, 2024 WL 1463416 (11th Cir., April 4, 2024)

April 2, 2024 Cybersquatting, Trademarks, Unfair Competition

Redirecting URL was unlawful but did not cause damages

url redirect trademark

In the months leading up to the FDA shutting down plaintiff’s business, one of the co-owners of the business left and set up a competing enterprise. For a few weeks, the former co-owner set plaintiff’s domain name to forward to the new company’s website.

Plaintiff sued and the court held that redirecting the URL was a violation of the Lanham Act (the federal law relating to trademarks and unfair competition). But plaintiff was not entitled to any damages because it failed to show that the redirection caused any lost sales. During that time, 133 users who tried to access plaintiff’s website were redirected to the new company’s website, and of those 133 visitors, only two submitted inquiries and neither customer who submitted an inquiry placed an order.

ABH Nature’s Products, Inc. v. Supplement Manufacturing Partner, Inc., 2024 WL 13452228 (E.D.N.Y., March 29, 2024)

Can the owner of a company be personally liable for what the company does?

personally liable

One of the major benefits of forming a corporation or limited liability company is the shield from personal liability the business entity provides to its owners. But that shield does not protect against all of the company’s officers’ conduct.

In a recent trademark infringement case in federal court in California, a court evaluated whether a company’s officer could face liability for trademark infringement and cybersquatting. Plaintiff sued the company and the owner individually, asserting that that the owner should be personally liable because he controlled and was involved in all significant corporate decisions regarding the alleged infringement.

Citing to Facebook, Inc. v. Power Ventures, Inc., 844 F.3d 1058 (9th Cir. 2016), the court observed that a corporate officer can be personally liable when he or she is the “guiding spirit” behind the wrongful conduct, or the “central figure” in the challenged corporate activity.

In this case, the court declined to dismiss the individual defendant from the lawsuit. With respect to the alleged trademark infringement and cybersquatting, the court focused on the fact that the individual defendant:

was the founder and central figure of the company,
personally participated in all major business strategy, branding and marketing decisions and actions,
ran the company from his home,
was the only officer of the company and was simultaneously the CEO, CFO and Secretary,
promoted the company’s brand from his personal social media account, and
directly negotiated with the plaintiff’s founder to see whether the parties could “find a more peaceful resolution.”

Simply stated, the individual defendant was not merely a board member that “final say,” but was substantially involved in every aspect of the conduct of the business giving rise to the alleged intellectual property infringement.

Playground AI LLC v. Mighty Computing, Inc. et al., 2024 WL 1123214 (N.D. Cal., March 14, 2024)

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January 10, 2024 Cybersquatting, Trademarks

No ACPA injunction because mark was not distinctive when domain name first registered

ACPA

This case had a bit of a weird result – even though the brand owner had a mark that was 20 years old, and the alleged cybersquatter in the meantime acquired a domain name on the open market identical to that mark, because the domain name was first registered (by an unrelated party) before the brand owner’s trademark rights arose, there was no relief under federal trademark law. One may question whether such a result creates a loophole for bad faith actors.

History of registration and rights

Someone – no one seems to know who – first registered the disputed domain name <trx.com> back in 1999. In 2003, plaintiff’s successor in interest (via bankruptcy) began using the trademark TRX, thereby acquiring rights in the mark. Defendant bought the domain name in 2022.

Plaintiff sued defendant under the Anticybersquatting Consumer Protection Act (ACPA), a part of U.S. trademark law that deals with bad faith domain name registration. Plaintiff sought a preliminary injunction ordering the transfer of the disputed domain name pending resolution of the lawsuit. The court denied the motion because it found that plaintiff had not established that plaintiff would likely succeed on the merits of the cybersquatting claim.

Outcome up for critique

The legal holding is potentially problematic, however, and represents a point on which different federal courts sitting in different parts of the country handle cybersquatting claims differently under the ACPA.

In this case, the court held that plaintiff’s cybersquatting claim depended on when the disputed domain name was first registered. Citing to a 2023 case from the same district, Blair v. Automobili Lamborghini SpA, which in turn relied on the Ninth Circuit’s opinion in GoPets Ltd. v. Hise, 657 F.3d 1024 (9th Cir. 2011), the court explained that liability for cybersquatting is possible “only when a person other than the trademark owner registers a domain name that is confusingly similar to a trademark that is distinctive at the time of the domain name’s registration.” It went on to note that “[i]n other words, if a domain name is registered before a particular trademark exists, the trademark owner cannot assert a viable cybersquatting claim against the domain name owner.”

So under this logic, because the domain name was registered prior to 2003 (when the rights in the TRX mark came into existence), there is no way plaintiff’s TRX mark could have been distinctive at the time of the domain name’s registration. The court came to this conclusion even though the record demonstrated that some unknown person, other than defendant, first registered the disputed domain name, and that defendant first acquired the domain name on the market many years after the TRX mark had become distinctive.

It is interesting to note that this outcome conflicts with decisions in other circuits that hold “re-registration” by a new owner counts as the time for evaluating whether a mark with which a domain name may be confusingly similar, is distinctive. See, e.g., Instructure, Inc. v. Canvas Technologies, Inc., 2022 WL 43829 (D. Utah, January 5, 2022). One could argue it is bad policy for the ACPA system to essentially absolve a bad faith actor who acquires a domain name that contains a protectible mark but was first registered by someone else not acting in bad faith, prior to the time the mark became strong.

JFXD TRX ACQ LLC, v. trx.com, 2024 WL 98424 (D. Ariz., January 9, 2023)

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May 10, 2023 Cybersquatting

The use of AI in the domain name industry

Artificial intelligence has important uses in the domain name industry. With the use of AI, domain name registration, management, and valuation have been made more efficient and accurate. Here are some specific ways AI is affecting domain names:

Domain name suggestion and search optimization: AI-powered domain name generators can suggest relevant and available domain names based on specific keywords, making the search process easier and faster for businesses and individuals. Additionally, AI algorithms can optimize search results based on user behavior and preferences, making it easier for potential customers to find the right domain name for their needs.

Domain name valuation: AI algorithms can analyze and evaluate domain names based on various factors such as age, traffic, and backlinks, among others. This information is valuable for domain name investors and businesses looking to acquire domain names that align with their branding strategies.

Domain name security: AI-powered security tools can detect and prevent domain name fraud and phishing attacks. These tools can identify suspicious behavior, such as attempts to hijack a domain name, and alert domain name owners and security teams to take necessary actions.

Domain name portfolio management: AI algorithms can help businesses and individuals manage their domain name portfolios more efficiently by providing insights on which domain names to renew, which to drop, and which to acquire. This information can help businesses save money and optimize their domain name strategies.

AI is transforming the domain name industry by making it more efficient, secure, and cost-effective. Domain name registrars, investors, and businesses can leverage AI-powered tools to find, evaluate, and manage domain names more effectively, making the process easier and faster for all involved. We can expect even more innovations in the domain name industry in the years to come.

April 25, 2022 Contracts, Cybersquatting

Restraining order issued against domain name seller who refused to transfer

restraining order domain name

Defendant listed a domain name for sale using DomainAgents. After a couple rounds of negotiation, plaintiff accepted defendant’s counteroffer to sell the domain name. But when the time came to put the domain name in escrow to enable transfer, defendant backed out of the deal, saying he had changed his mind. Plaintiff sued for breach of contract and sought a temporary restraining order that would prohibit defendant from transferring the domain name.

The court granted the motion. It agreed with plaintiff that it was appropriate to determine the motion ex parte (that is, without giving notice to the defendant) because the defendant could transfer the domain name in the meantime, thereby depriving plaintiff of the ability to procure an irreplaceable asset.

It found plaintiff would likely succeed on the merits of the breach of contract claim, because plaintiff had shown that a valid contract likely existed, that plaintiff was willing to perform its end of the bargain, that defendant had breached by refusing to go through with the transaction, and that plaintiff had been damaged due to the loss of the ability to procure the domain name from defendant.

The court further found a likelihood of irreparable harm to plaintiff, in that defendant’s communicated belief that he was not bound by the purchase agreement indicated he would sell the domain name to another interested party. If that were to happen, plaintiff would have no recourse against that purchaser, who was not in privity of contract with plaintiff.

Moreover, the court found the balance of equities favored plaintiff. The temporary restraining order would only be in place until a further hearing on injunctive relief could be had, and defendant would not otherwise be restricted from using the domain name in the meantime.

Finally, the court held that the public interest favored granting injunctive relief. The public interest strongly favors enforcing contracts.

Jump Operations, LLC v. Merryman, 2022 WL 1082641 (D. Nev., April 8, 2022)

Strip club operator wins motion in domain name dispute against GoDaddy company

NameFind is a GoDaddy company that holds registrations of domain names and seeks to make money off of them by placing pay-per-click ads on parked pages found at the domain names. Global Licensing owns the DEJA VU trademark that is used in connection with strip clubs and other adult-related services. When NameFind used the domain name dejavushowgirls.com to set up a page of pay-per-click ads, Global Licensing sued, raising claims under the federal Anticybersquatting Consumer Protection Act (ACPA), 15 U.S.C. 1125(d).

cybersquatting domain name dispute

Arguing that the cybersquatting claim had been insufficiently pled, NameFind moved to dismiss. The court denied the motion.

To establish a “cybersquatting” claim under the ACPA, a plaintiff 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, plaintiff’s mark; and (4) defendant used, registered, or trafficked in the domain name (5) with a bad faith intent to profit. DaimlerChrysler v. The Net Inc., 388 F.3d 201 (6th Cir. 2004) (citing Ford Motor Co. v. Catalanotte, 342 F.3d 543, 546 (6th Cir. 2003)).

Identical or confusingly similar

NameFind first argued that the court should dismiss the ACPA claim because there were no “non-conclusory” allegations explaining how the content on its website could be confusingly similar to plaintiff’s entertainment services. The court found this argument unpersuasive, however, because the content of the website was not important in evaluating this element. Instead, the court was to make a direct comparison between the protected mark and the domain name itself, rather than an assessment of the context in which each is used or the content of the offending website. It found the disputed domain name and plaintiff’s mark to be identical or confusingly similar because the disputed domain name incorporated plaintiff’s mark, and there were no words or letters added to plaintiff’s mark that clearly distinguished it from plaintiff’s usage.

Bad faith intent to profit

The court likewise rejected NameFind’s second argument, which was that plaintiff had not sufficiently pled NameFind’s bad faith intent to profit. The main point of the argument was that most of plaintiff’s allegations were made “on information and belief”. (That phrase is used in lawsuits when the plaintiff does not know for sure whether a fact is true, so it hedges a bit.) The court observed that allegations made on information and belief are not per se insufficient.

In this case, the court stated that the “on information and belief” allegations should not be considered in isolation, but should be considered in the context of the entire Complaint, including the factual allegations that: (1) NameFind had no intellectual property rights in or to the DEJA VU mark; (2) the disputed domain name was essentially identical to plaintiff’s mark and did not contain defendant’s legal name; (3) plaintiff did not authorize or consent to such use; (4) the domain name was configured to display pay-per-click advertisements to visitors, which provided links to adult-related entertainment sites; (5) as such, the disputed domain name was likely to be confused with plaintiff’s legitimate online location and other domain names, and deceive the public; and, (6) defendant’s website harmed plaintiff’s reputation and the goodwill associated with its marks by causing customers to associate plaintiff with the negative qualities of defendant’s website.

Global Licensing, Inc. v. NameFind LLC, 2022 WL 274104 (E.D. Michigan, January 28, 2022)

January 11, 2022 Cybersquatting

ACPA claim survives because mark was distinctive when domain name was re-registered

ACPA distinctive re-regiistered

Federal law has a statute that prohibits abusive domain name registration. The Anticybersquatting Consumer Protection Act, 15 U.S.C. 1125(d) (ACPA) provides, among other things, that one is prohibited from registering, trafficking in or using, with a bad faith intent to profit, a domain name that is confusingly similar to another’s trademark that was distinctive when the domain name was registered.

In the recent case of Instructure, Inc. v. Canvas Technologies, the court considered whether the ACPA requires the mark to have been distinctive when the domain name was first registered, or whether it can still be protected by being distinctive when the domain name was re-registered. It held that the statute applies to distinctiveness at re-registration.

In this case, the disputed domain name was first registered in 1997, several years before plaintiff obtained trademark rights in its CANVAS mark. Defendant moved to dismiss plaintiff’s cybersquatting claim, arguing that the plaintiff did not have rights to a distinctive mark when the domain name was first registered, and that therefore the statute’s requirement was not met. Plaintiff showed, however, that the ownership of the domain name changed sometime in 2021 (i.e., it was re-registered).

Looking to the statute’s plain language, Congressional intent, public policy, and the trending weight of authority in other federal circuits, the court held that re-registration, or “registration again” is contemplated under the ACPA’s language. It denied defendant’s motion to dismiss the ACPA claim.

Instructure, Inc. v. Canvas Technologies, Inc., 2022 WL 43829 (D.Utah, January 5, 2022)