Mixed results for Google in Vulcan Case
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In Vulcan Golf LLC v Google Inc (Case 1:2007cv03371, July 31 2008), the US District Court for the Northern District of Illinois has dismissed racketeering allegations against the internet search engine operator Google Inc, numerous domain name registrants and parking companies in a putative class action lawsuit brought by owners of registered trademarks and domain names. However, the court denied the defendants’ motions to dismiss claims for violation of the Anti-cybersquatting Consumer Protection Act (ACPA), trademark infringement and dilution under the Lanham Act, unjust enrichment, civil conspiracy and tortious interference with prospective economic advantage, deciding that the plaintiffs had properly stated claims on these allegations for the case to proceed to discovery.
The court’s order, which was issued in respect of the third amended complaint, summarized that the plaintiffs (Vulcan Golf LLC, John B Sanfilippo & Son Inc, Blitz Realty Group Inc and Vincent E 'Bo' Jackson) alleged that the defendants (Google, Oversee.Net, Sedo LLC, Dotster Inc (a/k/a Revenue Direct.Com) and Internet Reit Inc (d/b/a IReit Inc)) had:
“engaged in a wide-ranging scheme whereby they received billions of dollars in ill-gotten advertising and marketing revenue by knowingly and intentionally registering, licensing and monetizing purportedly deceptive domain names at the expense of the plaintiff mark owners.”
The plaintiffs claimed that because the defendants were part of an enterprise controlled by Google in a scheme based on Google's AdSense program (which, in turn, generated revenue through advertisements placed in connection with the deceptive domain names), they had violated the Racketeer Influenced and Corrupt Organizations Act (RICO). The court dismissed the RICO claim on the grounds that "the persons identified by the plaintiffs (ie, each of the defendants)" did not function in a requisite structure, holding that "there is nothing to suggest that the various members of the alleged Google network had any specific knowledge of the others’ existence", thus rendering impossible the creation of the hierarchical structure required by RICO.
The court also maintained an unjust enrichment claim under Illinois state law and addressed a claim for tortious interference with prospective economic advantage. To obtain relief under the tortious interference claim, a plaintiff must show that:
- it had a reasonable expectation of entering into a valid business relationship with another party; and
- the defendant knowingly and purposefully interfered by preventing the expectancy to mature, thus creating an economic damage to the plaintiff.
In the present case, the plaintiffs claimed that by diverting internet users to the deceptive domain names, the defendants had interfered in their relationships with these internet users. As a result, the plaintiffs had suffered lost revenues. The defendant parking companies contended that this claim should be dismissed because the plaintiffs had failed to prove knowledge on their part (a 'parking company' is a company that aggregates numerous domain names from individual domain registrants and contracts with an advertising service to license and monetize those domain names). The court found that the defendants, while asserting the plaintiffs’ failure to fulfil the statutory requirements, were essentially making an argument based on standing. The court thus dismissed the defendants’ motion until the issue of class certification is resolved.
In an earlier order issued last March, the court held that the plaintiffs had properly stated claims of trademark infringement under the Lanham Act and violations of the ACPA. The plaintiffs alleged that the defendants used the domain names through domain tasting, licensing, trafficking in, monetizing, and utilizing and controlling deceptive domain names. In particular, the plaintiffs argued that the parking companies, after taking control of the domain names, had "traffick[ed] in, monetize[d], and/or [sold] the domain names using an auction system". They also alleged that Google had paid registrants for its use of the deceptive domain names, provided registrants with domain performance reporting, participated in the tasting of domain names and selected revenue maximizing advertisements, and controlled and maintained that advertising. The defendants, on the other hand, argued that they were not the registrants/owners and that they had registered no domain names. Liability can exist only for the owner/registrant that uses the domain name. The court sided with the plaintiffs by acknowledging that:
"these allegations fall under the ACPA’s prohibition of ‘trafficking in', which is defined by the ACPA as engaging in transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration."
Therefore, the 'use' prong of the ACPA was satisfied, even if the alleged infringers were not the owners/registrants of the deceptive domain names.
A decision on the issue of class certification is now awaited.
Sebastian Lovera and Dennis Prahl, Ladas & Parry LLP, New York
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