ACPA Part 5: The Elements of a Cause of Action (Bad Bad Faith)

In order to succeed on an AntiCybersquatting Consumer Protection Act cause of action, a Trademark Owner (TMO) must establish:

• the TMO has a valid distinctive or famous trademark entitled to protection;
• the domain name and the trademark are either identical or confusingly similar (or dilutive for famous trademarks);
• the domain name owner used, registered, or trafficked in the domain name;
• with a bad faith intent to profit from the mark.

15 U.S.C. § 1125(d). See, e.g., DSPT Int'l, Inc. v. Nahum, 624 F3d 1213 (9th Cir. 2010); Bavaro Palace, S.A. v. Vacation Tours, Inc., 203 F. App'x. 252, 256 (11th Cir. 2006). 

Nine, Count Them, Nine Bad Faith Elements

The focus of this paper is the last element: bad faith.  There were a number of other trademark and domain name disputes that Congress was aware of at that time which included gripe sites, registration of multiple domain names not specifically associated with trademarks, the use of trademarks in metatags or on websites generally, and other quibbles.  Congress had the opportunity to create a nice neat law targeting relief for TMOs from nefarious cybersquatters, without touching upon other controversies.   The ACPA was designed to address the problem of cybersquatting, not other tiffs.

But Congress had to give the courts the means to distinguish the nefarious from the non-nefarious.  Thus, Congress handed down the Nine Bad Faith Factors. 

 (B) (i) In determining whether a person has a bad faith intent described under subparagraph (A), a court may consider factors such as, but not limited to—

(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 subsection (c).

15 U.S.C. § 1125(d)(1)(B)(i).

There is no particular manner in which a court has to consider these factors, nor is a court limited to or required to follow these factors – they are merely guidelines. These factors are designed to balance the interests of TMOs with the legitimate interests of individuals on the Internet.32  In explaining how to proceed with a bad faith analysis, Congress stated

Each of these factors reflect indicators that, in practice, commonly suggest bad-faith intent or a lack thereof in cybersquatting cases. The Committee understands that the presence or absence of any of these factors may not be determinative. For example, while noncommercial uses of a mark, such as for comment, criticism, parody, news reporting, etc. * * *, are beyond the scope of the bill's prohibitions, the fact that a person uses the domain name at issue in connection with a site that makes a noncommercial or fair use of the mark does not necessarily mean that the domain name registrant lacked bad faith. To recognize such an exemption would eviscerate the protections of the bill by suggesting a blueprint for cybersquatters who would simply create criticism sites in order to immunize themselves from liability despite their bad-faith intentions. By the same token, the fact that a defendant provided erroneous information in applying for a domain name registration or registered multiple domain names that were identical to, confusingly similar to, or dilutive of distinctive marks does not necessarily show bad-faith. The Committee recognizes that such false information may be provided without a bad-faith intent to trade on the goodwill of another's mark, and that there are likely to be instances in which multiple domain name registrations are consistent with honest business practices. Similar caveats can be made for each of the eight balancing factors, which is why the list of factors is nonexclusive and nonexhaustive. Courts must ultimately weigh the facts of each case and make a determination based on those facts whether or not the defendant registered, trafficked in, or used the domain name with bad-faith intent to profit from the goodwill of the mark of another.

The AntiCybersquatting Consumer Protection Act, Report 106-140, 106th Cong., 1st Sess., p. 8 (Aug. 5, 1999).

The nine factors do not covered every unique fact pattern before the courts.  The Courts, therefore, have concluded that they may examine and consider the unique factors of each case. It is ultimately up to each individual court how it weighs these different factors.  "The role of the reviewing court is not simply to add factors and place them in particular categories, without making some sense of what motivates the conduct at issue. The factors are given to courts as a guide, not as a substitute for careful thinking about whether the conduct at issue is motivated by a bad faith intent to profit." Lucas Nursery & Landscaping, 359 F. 3d at 811 (6th Cir. 2004).

Next Up:  The Bad Faith Scorecard