Saturday, September 08, 2012

In Which the Court Finds a "Get Out of #ACPA Cause of Action Free Card" - AIRFX.COM v AirFX LLC DCAz 2012

So apparently in Arizona you can beat an AntiCybersquatter Consumer Protection Act cause of action if your domain name registration dates back before the registration of the trademark. AIRFX. COM v. AirFX LLC, Dist. Court, D. Arizona 2012. 

Well, okay, that makes sense at first blush.  It would be kind of hard to cyberpirate a trademark if the trademark doesnt exist. The ACPA protects trademarks only.

But registration isnt the end of the story.  Plenty of courts have held that a domain name registration that was made in good faith at the time of registration can become bad faith after registration. [Lahoti p 1202 9th Cir. 2009] [DSPT p 17 9th Cir. 2010] [Gharbi WDTX 2011 (where use was permissive at time of registration but became bad faith at termination of contract between domain name owner and trademark owner)]

Furthermore, the element of the cause of action in question is that the defendant "
registers, traffics in, or uses" the domain name in question.  The operative work here being "or". Even if the registration was in good faith, the use of the domain name could be in bad faith. 15 USC § 1125(d)(I)(A).

Finally, according to the Arizona court, the domain name holder can defeat an ACPA cause of action by tracing the registration back through re-registrations and transfers.  A chain of custody which includes sales, transfers, and reregistrations which places the original domain name registration back before the registration of the trademark gives the domain name owner a free "Get Out Of ACPA Jail Free Card."

Here's what the court said:

To prevail on its ACPA cybersquatting counterclaim, defendant "must show (1) registration of a domain name, (2) that was identical or confusingly similar to a mark that was distinctive at the time of registration, and (3) bad faith intent at the time of registration." GoPets Ltd. v. Hise, 657 F.3d 1024, 1030 (9th Cir. 2011) (citing 15 U.S.C. § 1125(d)(1)) (internal quotation marks omitted) (emphasis in original).[3]

The Ninth Circuit addressed the meaning of "registration" in GoPets. The domain name was first registered by defendant Edward Hise in March 1999. Id. at 1026. GoPets Ltd. first used the GoPets mark in August 2004. Id. at 1027. In December 2006, Hise transferred the registration of the domain name to co-defendant Digital Overture, a corporation he co-owned. Id. at 1028.

GoPets Ltd. asserted a cybersquatting claim under the ACPA. It conceded that was not identical to a protected mark when Hise first registered the domain name in 1999, but argued that the transfer of the domain name to Digital Overture in 2006 was a "registration" under the meaning of the ACPA. Id. at 1030. The court disagreed, holding that Digital Overture's 2006 re-registration of was not a registration under § 1125(d)(1). Id. at 1032. The court noted that it was "undisputed that [] Hise could have retained all of his rights to indefinitely if he had maintained the registration of the domain name in his own name." Id. at 1031. It found that there was "no basis in ACPA to conclude that a right that belongs to an initial registrant of a currently registered domain name is lost when that name is transferred to another owner." Id. Doing so would effectively make rights to many domain names inalienable, whether "by gift, inheritance, sale, or other form of transfer," in contrast to the general rule that "a property owner may sell all of the rights he holds in property." Id. at 1031-32. Accordingly, GoPets concluded that "[b]ecause [] Hise registered in 1999, long before GoPets Ltd. registered its service mark, Digital Overture's re-registration and continued ownership of does not violate § 1125(d)(1)." Id. at 1032.

Defendant argues that GoPets is distinguishable, because in GoPets Hise transferred the domain name to an entity he co-owned, and here Lurie purchased from an unrelated third party. According to defendant, the purpose of the ACPA will be undermined if a cybersquatter who purchases a domain name in bad faith is immune from liability simply because the domain name he purchased existed before a mark was distinctive. Nothing in the language of GoPets indicates that it should be read as narrowly as defendant suggests. GoPets did not distinguish between transfers of a domain name to related parties and other kinds of domain name transfers. To the contrary, GoPets broadly reasoned that if an original owner's rights associated with a domain name were lost upon transfer to "another owner," the rights to many domain names would become "effectively inalienable," a result the intention of which was not reflected in either the structure or the text of the ACPA. Id. at 1031-32.

We find GoPets squarely on point. It is undisputed that was initially registered on March 21, 2003 by Bestinfo. It is also undisputed that ASE's first use in commerce of the AirFX mark was June 2005 and that Elliot purchased on February 2, 2007. Under these facts, was registered more than two years before the AirFX mark existed. Thus, under GoPets, plaintiffs' re-registration of in February 2007 "was not a registration within the meaning of § 1125(d)(1)." Id. at 1032. Rather, because Bestinfo registered "long before [defendant] registered its service mark," plaintiffs' registration and ownership of "does not violate § 1125(d)(1)." Id. Plaintiffs are therefore entitled to summary judgment on defendant's cybersquatting counterclaim.

AIRFX. COM v. AirFX LLC, Dist. Court, D. Arizona 2012:

Cybertelecom ACPA:

Post a Comment