Tuesday, August 02, 2011

The Wayward AntiCybersquatter Consumer Protect Act :: A Draft TPRC Paper

So (as previously reported) a guy walks into a bar... webdesigner shop.  The guy, we'll call him Paul, contracts with Dan, a webdesigner, to make a fabulous website for Paul's company FOOBAR.  The two parties agree that Dan shall register the domain name FOOBAR.FOO and make a website for Paul in exchange for $100.  Dan sets to work, registering the domain name, designing the website, and making it generally fabulous.  

Now, as things happen, the relationship between Dan and Paul "soured."  Paul demanded that Dan turn over the domain name and website to Paul.  Dan agreed, on the condition that Paul pay any outstanding amounts due.

Question: Has Dan violated the Anticybersquatting Consumer Protection Act?

According to the 9th Circuit, he has.  In DSPT International, Inc. v. Lucky Nahum (9th Cir. Oct. 27, 2010), the 9th Circuit stated
[The ACPA] may fairly be read to mean that it is bad faith to hold a domain name for ransom, where the holder uses it to get money from the owner of the trademark rather than to sell goods. The jury had evidence that Dan was using the “foobar.foo” domain name as leverage to get Paul to pay him the disputed commissions, not for the bona fide sale of clothes. Though there was no direct evidence of an explicit offer to sell the domain to Paul for a specified amount, the jury could infer the intent to give back the site to Paul only if Paul paid Dan the disputed commissions.

The “intent to profit” [of the ACPA] means simply the intent to get money or other valuable consideration. “Profit” does not require that Dan receive more than he is owed on his disputed claim. Rather, “[p]rofit includes an attempt to procure an advantageous gain or return.” Thus, it does not matter that, as the jury concluded, Dan’s claim for unpaid commissions was meritless, because he could not hold the domain name for ransom even if he had been owed commissions.
Really?  Wow. Sucks to be a webdesigner!  Read that last sentence again. According to the 9th Circuit, any time a webdesigner insists on getting paid, the webdesigner just violated the ACPA.

That just doesn't seem right.  It's really hard to conceive that the ACPA, which was enacted to deal with guys in the 1990s who were registering 1000s of domain names and ransoming them to trademark owners for $25,000 a pop, should cover two guys in a contractual dispute.  Being irked by the 9th Circuit's decision, I decided to read every ACPA court decision since enactment in 1999 and do a statistical analysis of how court's have been going astray with the ACPA.

In order to identify the nefarious cybersquatters, Congress gave the court's nine bad faith factors (guidelines really).  With eleven years of court decisions under our belt, we could probably get a pretty good idea of how courts have been applying the ACPA, and see if they have in fact gone astray.

I proposed this idea as a paper for the Telecommunications Policy Research Conference this coming fall.  TPRC accepted the paper and I have been busy sitting on my couch measuring "nefariousness."  I plan on presenting a sneak preview of the research through a series of forthcoming blog posts (I'm fishing for feedback). 

Today's chart:  On average, trademark owners have won litigations 66% of the time and domain name owners have won 34% of the time.  In the first year, domain name owners didnt win any cases.  In time, however, the success rates of domain name owners has improved.  During the first five years domain name owners winning-percentage was almost always under 34%; in the last five years the winning percentage has usually been over 34%.  In 2008 and 2009 the domain name owners (the defendants) won a majority of the cases.

Of course methodology influences results in an analysis like this.  In my next post I will explain the methodology for this survey.... and provide another chart!

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