French judgment is not an action under US law, court rules

In Hawes v Network Solutions Inc and L'Oréal SA, the Court of Appeals for the Fourth Circuit has reversed a lower court decision to dismiss a complaint against cosmetics company L'Oréal. The appellate court ruled that an action or judgment by a French court is not considered an action under US law and, thus, the complainant had a right to adjudicate in the United States the question of whether his registration of the domain name 'lorealcomplaints.com' was lawful.

In April 1999 Christopher J Hawes registered the domain name 'lorealcomplaints.com' with Network Solutions Inc (NSI). L'Oréal filed suit against Hawes in a French court alleging trademark infringement. Upon learning of the French litigation, NSI tendered control and authority over the domain registration to the French court in accordance with its standard service agreement. Hawes failed to appear before the French court and L'Oréal obtained the transfer of the domain name on the grounds that Hawes's registration was unlawful.

Hawes then sued NSI and L'Oréal in the US District Court for the Eastern District of Virginia. He demanded that the domain name be returned to him, alleging that (i) his registration of 'lorealcomplaints.com' was lawful, and (ii) NSI breached the domain name registration agreement when it transferred the domain name to the French court.

The court dismissed the complaint against NSI for lack of subject matter jurisdiction and ultimately dismissed the action against L'Oréal on the same grounds.

On appeal, the Fourth Circuit upheld the district court ruling in relation to the action against NSI. It noted that at the time NSI transferred control of the domain name to the French court, the Anti-cybersquatting Consumer Protection Act (ACPA) was not in effect and, accordingly, NSI could not be in violation thereof. In addition, the Fourth Circuit, construing the ACPA, noted that in any case, the one exception under which domain registrars may be found liable for trademark infringement is if they transfer a domain name while an action is pending. In the case at hand, there was no action pending in any US court at the time NSI transferred the domain name to the French court. The action or judgment of the French court was not an action as countenanced by the ACPA and, therefore, the claim against NSI was properly dismissed for lack of subject matter jurisdiction.

Addressing the case against L'Oréal, the Fourth Circuit reversed the lower court's decision. The appellate court disagreed with the district court's finding that there was no case or controversy after the French court ordered transfer of the domain name to L'Oréal in France. Instead, the Fourth Circuit held that Hawes had a right to adjudicate the question of whether his registration of the domain name was lawful. The appellate court concluded that while dismissal of the action against NSI for transferring the domain name to the French court was not a violation of its domain name dispute resolution policy, the case in the French court was neither a resolution under NSI's policy nor an action or judgment under US law. Therefore, Hawes was entitled to have his claim considered by a US court. Accordingly, the Fourth Circuit remanded this portion of the case for further proceedings.

Robert Lyon, Holland & Knight, Los Angeles

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