Major statutory damages awarded against UK cybersquatter

In BioCryst Pharmaceuticals Inc v Namecheap.com CV 05-7615 JFW, November 21 2006, the US District Court for the Central District of California has awarded statutory damages of $300,000 plus attorneys' fees of over $70,000 under the Anti-cybersquatting Consumer Protection Act (ACPA) against a serial cybersquatter residing in the United Kingdom. The decision is notable both for the magnitude of damages assessed and for the entry of an in personam judgment against a non-resident.

The main defendant in the proceedings was an individual named Kumar Patel, a British citizen. Patel has registered numerous internet domain names that cybersquat on the names of pharmaceutical companies. He has been, in consequence, the subject of many actions brought by the aggrieved companies. One such action arose when BioCryst Pharmaceuticals Inc based in Birmingham, Alabama, accidentally failed to renew its registration of 'BioCrystPharmaceuticals.com', and Patel snapped up the registration. To recover its domain name, BioCryst brought a Uniform Domain Name Dispute Resolution Policy (UDRP) proceeding against Patel, but lost in a questionable decision, predicated on the dubious ground that the parties were not in commercial competition with one another.

To vindicate its rights, BioCryst could have filed a simple in rem action under the ACPA in the Eastern District of Virginia, where the '.com' registry is located, and recovered the domain name. But Patel contracted with a California domain name reseller, NameCheap, which substituted itself as the official registrant of the domain name while Patel continued to operate the website. Because the registrant of the domain name was physically present in the United States, BioCryst could not file an in rem action under the ACPA, and was obliged to file an in personam action against NameCheap in the US District Court for the Central District of California. BioCryst obtained an order from that court directing that the domain name be transferred back to it, but Patel contacted BioCryst's counsel, claiming that the domain name was his, and registered two more confusingly similar domain names: 'BioCrist.com' and 'BioCrystPharmaceutical.com'.

Because Patel confirmed his arrangement with NameCheap, and continued his campaign of cybersquatting, he was added as a defendant in the California federal court action. With the court's permission, he was served via email and international mail. He did not respond to the lawsuit, so judgment by default was entered against him. And given the egregious and continuing nature of his offences, BioCryst sought and received a sizeable award of $300,000 statutory damages, one of the highest awards of such damages under ACPA in the past four years.

The court's exercise of personal jurisdiction was appropriate because Patel, having used a California domain name reseller as a cover, had availed himself of the benefits and protections of that jurisdiction sufficiently to establish minimum contacts there. This decision may be part of a general trend basing personal jurisdiction on the use of surrogates. For example, another case from the US District Court for the Northern District of Georgia, decided on August 31 2006, held that masking the origin of email spam by routing it through an internet service provider's (ISP) mail servers so that it appeared that the messages originated from the ISP itself, justified personal jurisdiction over the spammers in the ISP's forum (EarthLink Inc v Pope NDGa, 03-2559, 8/31/06).

The BioCryst decision therefore represents a practical extension of the ACPA's protections against a serial foreign cybersquatter who would try to circumvent its terms.

James L Bikoff and David K Heasley, Silverberg Goldman & Bikoff, Washington DC, with the assistance of Leonie Simons, an intern at the firm