Misleading UDRP exhibits could create liability under ACPA

United States of America

In ISystems v Spark Networks Ltd (Case 10-10905, March 21 2012), the US Court of Appeals for the Fifth Circuit has held that a company that allegedly redacted portions of an exhibit submitted in connection with a complaint under the Uniform Domain Name Dispute Resolution Policy (UDRP) may be liable for misrepresentation under the Anti-cybersquatting Consumer Protection Act (ACPA). 

In 1997 defendant Spark Networks Limited purchased the domain name 'jdate.com', through which it provides online dating services that cater to Jewish singles. The defendant registered the JDATE mark with the US Patent and Trademark Office for its web-based introduction services in January 2001. In May 2001 plaintiff ISystems purchased the domain name 'jdate.net' to market its Julian date (or JDATE) computation software product. The plaintiff later allowed an organisation called the Jewish Dating Network to use a subdomain of its 'jdate.net' website to provide a non-profit service that rates Jewish online dating resources. 

When the plaintiff did not comply with the defendant’s request that the plaintiff transfer to it the 'jdate.net' domain, the defendant filed an arbitration complaint under the UDRP. The defendant won transfer of the 'jdate.net' domain, causing the plaintiff to file a complaint in federal district court against the defendant and its parent company alleging, among other claims, that the defendant’s efforts in the UDRP action violated ACPA. The district court ultimately granted the defendant’s motion to dismiss, and the Fifth Circuit affirmed the district court. The Fifth Circuit later granted the plaintiff’s petition for rehearing.

Under the ACPA, a party is liable for damages if a registrar transfers a domain name based on such party’s “knowing and material misrepresentation… that a domain name is identical to, confusingly similar to, or dilutive of a mark”. The plaintiff alleged that the defendant materially misrepresented the nature of the plaintiff’s site by presenting a “true and correct copy” of the plaintiffs’ webpage as an exhibit to its UDRP complaint, while blacking out certain portions of the exhibit to make its website appear to be a commercial site rather than a non-profit resource. The plaintiff claimed that an actual copy of the opening page of the site would have identified the website as a not-for-profit resource, but instead, the redacted image of the site suggested that it redirected visitors to other websites for profit. 

Taking the plaintiff’s factual allegations as true (consistent with the applicable motion to dismiss standard of review), the Fifth Circuit agreed that the defendant’s alleged misrepresentation was material because the ACPA’s definition of 'dilution' specifically excludes non-commercial uses of a mark. In fact, the arbitrator explicitly relied on the lack of evidence of non-commercial use of 'jdate.net' in its decision to transfer the domain. On this basis, the Fifth Circuit reversed and remanded this ACPA claim, finding that the plaintiff pled the facts with sufficient particularity to survive the motion to dismiss.

The plaintiff also met its burden under the ACPA to proceed in seeking an order that its registration of 'jdate.net' was not unlawful at the outset, which is determined by reviewing evidence of bad-faith intent to profit from the domain name. The plaintiff alleged that it selected the JDate name solely to use in connection with its software product and that any similarity with the 'jdate.com' site did not benefit the plaintiff’s marketing of its software.  Further, the plaintiff alleged that, although the Jewish Dating Network eventually used a portion of its site, the use was purely non-commercial and resulted in no profits. Taking the plaintiff’s allegations as true, the Fifth Circuit was persuaded that the plaintiff lacked bad-faith intent and reversed and remanded this ACPA claim as well.

In light of this decision, practitioners should exercise caution in submitting UDRP-related filings, as any alteration to exhibits may be construed as misrepresentation.

Elisabeth Malis, McDermott Will & Emery LLP, Los Angeles

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