Harrods Case confirms burden of proof in cybersquatting disputes

Facts
Decision

The District Court for the Eastern District of Virginia has ruled that the appropriate burden of proof of bad faith in an in rem proceeding under the Anti-Cybersquatting Consumer Protection Act is 'a preponderance of the evidence'.

In Harrods Limited v Sixty Internet Domain Names, 110 FSupp 2d 420 (EDVa 2001), the court held that the registration of numerous domain names by a company formerly related to Harrods Limited was in bad faith within the meaning of the act, entitling Harrods to the transfer of the disputed names.

Facts

Harrods Limited, the plaintiff, is a company incorporated in the United Kingdom. Harrods (Buenos Aires) Limited (HBAL) is the successor company of a former subsidiary of Harrods Limited. HBAL operated a store in Buenos Aires called Harrods from 1912, offering similar products to the London store. It registered various HARRODS trademarks in South American countries. The legal relationship between the two companies ended in 1963 and the defendant discontinued operation of the store in 1998. In 1997 a UK court ruled that HBAL had the right to carry on business under the name Harrods anywhere in South America. In September 1999 Harrods Limited announced its intention to create an online shopping service. One day thereafter, HBAL registered approximately 300 domain names, including many variations of the HARRODS mark.

Decision

The court stated that the HARRODS trademark, registered in the United States by the plaintiff, was an inherently distinctive mark long before the domain names were registered. The court examined HBAL's actions under the nine factors set forth in the Anti-Cybersquatting Consumer Protection Act for determining whether a registrant had a "bad faith intent to profit" from the plaintiff's mark and noted that even though HBAL had a valid claim to use the trademark within Argentina, it exceeded its rights by registering the domain names. The court found that the registration of many domain names incorporating English words was "highly suspect," because HBAL was not authorized to use the name Harrods outside South America.

The court rejected HBAL's contention that the standard of proof under the Anti-Cybersquatting Consumer Protection Act is 'clear and convincing evidence of bad faith' and noted the use of the 'preponderance of the evidence' standard in most civil actions and in cases of trademark divestiture under the Lanham Act.

The court concluded that the evidence of bad faith was "abundant", and that the plaintiff would prevail even if the higher standard had been applied.

Maureen Garde, Brown Raysman Millstein Felder & Steiner LLP, New York