domain names – Attorney Evan Brown

April 1, 2024 Cybersquatting, Litigation, Trademarks

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)

See also:

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)

See also:

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.

February 2, 2022 Cybersquatting

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 6, 2022 Cybersquatting

UDRP loss results from lack of communication with domain registrar

UDRP domain registrar
In a recent case under the Uniform Dispute Resolution Policy (UDRP), the administrative panel determined that a party who had owned the disputed domain name for more than 20 years was not entitled to recover it from another party who bought the domain name at auction. The complainant alleged that it let the domain name registration lapse because it could not communicate with the domain name registrar, which apparently recently had been acquired by another registrar. After purchasing the domain name at auction, the respondent redirected it to his travel-related website. (The parties disputed whether that redirection continued – in a supplemental filing, the complainant characterized the respondent’s redirecting of the disputed domain name to pay-per-click ads as “thumbing his nose” at the tribunal and the complainant.

The panel found the use of the generic words “simple” and “plan” in the domain name, in relation to a travel-related website operating in the way described by the respondent, was legitimate. The panel therefore found that, before any notice to the respondent of the dispute, the respondent had used the domain name in connection with a bona fide offering of travel-related services.

As for the question of the respondent’s registration and use of the domain name in bad faith, the panel found there was insufficient evidence to demonstrate that the respondent had any hand in preventing the complainant’s renewal of the domain name or that he should have known of the complainant’s mark at the time when he purchased the domain name at auction. Further, the complainant did not submit any evidence of its reputation in the countries where the respondent lives or conducts business. Thus, the panel concluded that the complainant had not shown, by a preponderance of the evidence, that the was targeting the complainant’s mark.

Simple Plan Inc. v. Michel Rog, FORUM Claim Number FA2111001973743 (January 4, 2022)

April 6, 2020 Cybersquatting, Trademarks

Domain disputes under federal law can be inefficient

A recent case from a federal court in Kentucky shows why the Anticybersquatting Consumer Protection Act (15 U.S.C. 1125(d) – the “ACPA”) can be – compared to the Uniform Domain Name Dispute Resolution Policy (“UDRP”) – a relatively inefficient way of resolving domain name disputes under federal law.

Defendant was an infringer

Here is a quick rundown of the facts. Defendant owned a business directly competitive to plaintiff ServPro. Plaintiff had used its mark and trade dress since the 1960’s. Defendant set up a website using plaintiff’s color scheme, bought Google AdWords triggering ads showing plaintiff’s mark, and registered a domain name identical to plaintiff’s mark – servpro.click. These facts supported the court’s entry of summary judgment in plaintiff’s favor on the question of trademark infringement. But the ACPA claim got the court got hung up because of some hard-to-believe facts the defendant put forward.

What the ACPA requires

The ACPA requires a plaintiff to prove bad faith intent to profit from the disputed domain name. And it gives courts a list of nine things that a court can consider in determining this bad faith. In other words, this list is not the be-all and end-all guide for determining ACPA bad faith. Here are the nine things a court should consider in resolving domain name disputes under federal law:

(I) the trademark or other intellectual property rights of the person, if any, in the domain name;

(II) the extent to which the domain name consists of the legal name of the person or a name that is otherwise commonly used to identify that person;

(III) the person’s prior use, if any, of the domain name in connection with the bona fide offering of any goods or services;

(IV) the person’s bona fide noncommercial or fair use of the mark in a site accessible under the domain name;

(V) the person’s intent to divert consumers from the mark owner’s online location to a site accessible under the domain name that could harm the goodwill represented by the mark, either for commercial gain or with the intent to tarnish or disparage the mark, by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site;

(VI) the person’s offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party for financial gain without having used, or having an intent to use, the domain name in the bona fide offering of any goods or services, or the person’s prior conduct indicating a pattern of such conduct;

(VII) the person’s provision of material and misleading false contact information when applying for the registration of the domain name, the person’s intentional failure to maintain accurate contact information, or the person’s prior conduct indicating a pattern of such conduct;

(VIII) the person’s registration or acquisition of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names, or dilutive of famous marks of others that are famous at the time of registration of such domain names, without regard to the goods or services of the parties; and

(IX) the extent to which the mark incorporated in the person’s domain name registration is or is not distinctive and famous within the meaning of [the Lanham Act].

The court’s decision on cybersquatting

The court found that factors I through IV and IX weighed in plaintiff’s favor. But the court found there to be a genuine issue as to factor V and denied summary judgment. It found that defendant had an intent to divert plaintiff’s customers.

Defendant asserted he did not purchase the servpro.click domain name intending to divert customers from plaintiff for defendant’s gain. Instead, he alleged that he registered the domain name to collect information and perform analytical research for running Google AdWords. He also alleged that the website the domain name pointed to did not advertise that it was ServPro. And the contact information on the website pointed to his personal cellphone. He alleged that when answering calls made to that number, he identified himself as affiliated with his company and never identified himself as affiliated with plaintiff.

The court probably had difficulty denying summary judgment
in a situation where the facts alleged are so hard to believe. A court’s role at the summary judgment stage, however, is not to weigh the evidence, but merely to determine whether there is a factual issue for trial. The time for really ascertaining the truth of defendant’s assertions will come later.

Was the ACPA too cumbersome for this case?

In any event, these flimsy arguments remaining alive far into expensive litigation underscores how domain disputes under federal law are more cumbersome . The marshaling of evidence, briefing and argument in federal court can easily rack up six-figures in attorney’s fees and costs. Even after that effort, the summary judgment standard provides little assurance a party arguing against thin facts will get relief. Had the parties resolved this dispute under the UDRP and not the ACPA, plaintiff’s arguments would have had more success.

ServPro Intellectual Property, Inc. v. Blanton, 2020 WL 1666121 (W.D. Ky. April 3, 2020)

Court orders transfer of domain name at preliminary injunction stage of trademark case

October 11, 2019 Cybersquatting, Trademarks

Yahoo successor does not prevail in bid to obtain ymobile.com domain

Oath, Inc., the successor to Yahoo! Inc., filed an action under the Uniform Domain Name Dispute Resolution Policy (UDRP) against a domainer that acquired ymobile.com earlier in 2019. The split 3-member FORUM panel denied the complaint, finding that Oath failed to demonstrate that the respondent lacked rights or legitimate interests in the disputed domain name, and failed to show it registered and used the disputed domain name in bad faith.

On the question of rights or legitimate interests, the panel found that the respondent’s purchase and sale of the domain name comprised of the generic term “mobile” prefixed by “y” was legitimate, so long as the respondent did not intend to capitalize on Oath’s YMOBILE mark, which is registered in Japan. The panel accepted the respondent’s assertion that it had no notice of the YMOBILE mark prior to acquiring the disputed domain name.

Regarding bad faith registration and use, the panel similarly found that the respondent was not targeting the Y! or YMOBILE mark, and that it had no knowledge of the YMOBILE mark’s existence prior to acquiring the disputed domain name.

One of the panelists dissented, arguing that the disputed domain name should have been transferred. He emphasized how the respondent was using the disputed domain name – which the panel found was identical to a mark the complainant owns – to display pay-per-click ads for goods and services competitive with the complainant’s. Some of the ads, for example, were for online games and downloadable software. And on the issue of bad faith, this panel member observed that although the respondent claimed to not know of the complainant’s YMOBILE mark, a simple web search would have revealed it.

Oath Inc. v. Mira Hold, No. FA 1909001858330 (Forum, October 8, 2019)

November 28, 2018 Cybersquatting, Trademarks

UDRP Panel found no bad faith, but gave the Complainant additional opportunity to prove its case

[This post originally appeared on UDRP Tracker.]

The Complainant established its business beginning in March 2018 and sought to acquire the disputed domain name <zoyo.com> through communications with the Respondent facilitated by the registrar. After the Respondent demanded $10,000 for the disputed domain name – which was the same amount the Respondent claimed to have paid for the disputed domain name “a few years ago” – the Complainant sought relief from a single-member WIPO Panel under the UDRP.

The Panel denied the Complaint, finding that the Complainant failed to show bad faith use and registration under the UDRP.

The evidence on this point was controverted. The Respondent claimed (not in a formal response but through the above-noted negotiations) that he acquired the disputed domain name years ago, and the WhoIs data showed it was first registered in 2002. But the Complainant – looking to the “last updated” field in the WhoIs data, claimed that the Respondent acquired it in April 2018.

The Panel found that “failed to establish that the Respondent’s statement in response to the Complainant’s enquiry that it acquired the disputed domain name ‘some years ago’ [was] false.”

It further noted that the Complainant stated that it required the disputed domain name for use as part of the expansion and development of its business. The Panel surmised that this could indicate that the Complaint was filed as a part of the Complainant’s business expansion plan and perhaps indicated that the Complainant did not fully understand the nature and purpose of the UDRP.

So the Panel’s decision left open the possibility of further action if the facts would support them. The Panel determined that if the Complainant could prove that the Respondent did not acquire the disputed domain name until April 2018, at a time when there was considerable activity and perhaps publicity in relation to the establishment of the Complainant’s group, that might paint a different picture. Accordingly, on the basis of the evidence before the Panel on the present record, the Panel denied the Complaint but without prejudice to the filing of a new Complaint should evidence become available to support the Complainant’s contentions concerning the Respondent’s identity and acquisition of the disputed domain name.

Zoyo Capital Limited v. A. Zoyo, WIPO Case No. D2018-2234

November 1, 2017 Cybersquatting, Evidence

Confusing UDRP decision regarding proof required for showing of no rights or legitimate interests

(This is a cross-post from UDRP Tracker.)

In the case of BroadPath Healthcare Solutions / Jerry Robertson v. Maria Piro / Nova Nordisk, a one-member NAF Panel held that the Complainant failed to meet the second UDRP element, namely, it failed to establish that the Respondent lacked rights or legitimate interests in the disputed domain name <broad-path.org>.

The decision is confusing because the opinion appears to be self-contradictory. The Panel noted that the Complainant alleged (1) the Respondent is not commonly known by the disputed domain name, (2) that the Complainant had not authorized, licensed, or otherwise permitted the Respondent to use the Complainant’s mark, and (3) that the Respondent does not use the disputed domain name in connection with a bona fide offering of goods or services or legitimate noncommercial or fair use. Rather, the Complainant argued, the Respondent was attempting to pass off as the Complainant to facilitate fraud on Internet users.

Ordinarily, in an uncontested UDRP matter (such as this one, where the Respondent did not file a response), such allegations would be enough to establish a prima facie showing on the second UDRP element. It is unclear what more the Panel expected to see in terms of proof of lack of rights or legitimate interests. The prima facie showing requirement is used in light of the difficulty of proving a negative, which is what the second UDRP element calls for.

In any event, despite the Complainant’s allegations listed in the decision, the Panel concluded, in summary fashion without explanation, that the Complainant failed to make a legally cognizable argument under this second UDRP element. For this reason, the Panel did not go on to analyze the bad faith element, but instead denied the Complaint.

BroadPath Healthcare Solutions / Jerry Robertson v. Maria Piro / Nova Nordisk, Claim Number: FA1709001748692 (NAF October 31, 2017)

October 23, 2017 Cybersquatting, Litigation, Trademarks

Court orders transfer of domain name at preliminary injunction stage of trademark case

Plaintiff sued a competitor under the Anticybersquatting Consumer Protection Act (15 U.S.C. 1125(d) (“ACPA”)) and brought other trademark-related claims concerning the competitor’s alleged online scam of selling infringing nutritional supplement products. Plaintiff also sued the domain name privacy protection service Namecheap, which the competitor had used to register the domain name. As part of the order granting plaintiff’s motion for preliminary injunction, the court ordered Namecheap to transfer the domain name to plaintiff.

The court noted that a preliminary injunction “is an extraordinary remedy never awarded as of right,” and that the “traditional purpose of a preliminary injunction is to protect the status quo and to prevent irreparable harm during the pendency of the lawsuit.” Given these parameters, one may be reasonably surprised that the court went so far as to transfer the domain name before the case could be taken all the way through trial. Usually the transfer of the domain name is part of the final remedy awarded in a cybersquatting case, whether under the ACPA or the Uniform Domain Name Dispute Resolution Policy.

The opinion did not address the issue of whether the domain name transfer prior to trial might go further than to “protect the status quo”. It would seem the court could have just as easily protected the status quo by ordering the domain name not be used. The court apparently found the evidence to be drastically in favor of plaintiff. And since the defendant-competitor did not show up for the hearing, plaintiff’s evidence went unrebutted.

Nutramax Laboratories, Inc. v. Nutra Max Labs, Inc., 2017 WL 4707447 (D.S.C. October 20, 2017)