'audisport.com' cybersquatter hit with exceptional fees

In Audi AG v D'Amato, the US Court of Appeals for the Sixth Circuit has affirmed a summary judgment in favour of Audi AG - the owner of the AUDI and QUATTRO trademarks - against a cybersquatter who had registered and used the domain name 'audisport.com'. The appellate court agreed with the district court's findings that Bob D'Amato had committed trademark infringement and dilution, and had violated the Anti-cybersquatting Consumer Protection Act. The appellate court also affirmed entry of an injunction and an award of attorneys' fees on the grounds that the case constituted an "exceptional case" under the Lanham Act for the purposes of awarding fees.

D'Amato registered the domain name 'audisport.com', and then created a website at that address. Among other things, the site:

• offered Audi merchandise for sale;
  
  
• sold email addresses including the AUDI mark;
  
  
• linked to other sites; and
  
  
• provided advertising space.

D'Amato retained a graphic designer to create logos incorporating Audi marks. The designer inquired whether D'Amato was taking over management of Audi's sale of Audi-branded merchandise, noting that Audi sold such merchandise on its official website, and the designer questioned whether D'Amato had the right to use Audi's marks on his website.

Although D'Amato requested unofficial approval of his site from an employee of a local Audi dealer, he never received permission to use Audi's marks from Audi itself. Eventually, Audi objected to the 'audisport.com' domain name and the use of its marks on the site. D'Amato responded by removing Audi merchandise and links to other sites. However, he continued to sell advertising space on the site.

In affirming the district court's finding of infringement, the appellate court applied most likelihood of confusion factors against D'Amato. For example, the court found that:

• consumers would expect Audi to sell the merchandise sold on D'Amato's site;
  
  
• adding 'sport' to 'audi' in the domain name 'audisport.com' did not remove confusion; and
  
  
• the graphic designer's questions to D'Amato evidenced actual confusion.

The court also rejected several defences. D'Amato's disclaimer on his site, stating that the site was not associated with Audi, was negated by another statement on the site stating that D'Amato had a signed agreement with Audi. The court rejected D'Amato's argument that his site was non-commercial, finding that it had a commercial effect because D'Amato profited from advertising. D'Amato's fair use defence also failed because he presented no evidence rebutting the finding that confusion was likely.

Turning to dilution, the appellate court found that D'Amato's use of the site to sell merchandise, email subscriptions and advertising space amounted to use in commerce, and that use of an identical AUDI mark amounted to actual dilution. The court noted that D'Amato need not have earned any profit from his site in order to cause actual dilution.
With respect to cybersquatting, the appellate court concluded that D'Amato's registration and use of the 'audisport.com' domain name was in bad faith.

The Sixth Circuit held that injunctive relief was appropriate due to the potential for future confusion and dilution of Audi's marks. Finally, the court found that the district court had not abused its discretion by awarding attorneys' fees given D'Amato's bad faith use of Audi's marks. The court observed that D'Amato did not limit his site to protected speech, "such as news and information for Audi enthusiasts. Rather, he used counterfeit marks on his website and on the goods and services he attempted to sell for a profit".

David S Fleming, Brinks Hofer Gilson & Lione, Chicago