Monetary award entered in in rem cybersquatting action

In a landmark ruling favouring trademark owners, the US District Court for the Eastern District of Virginia, applying the Anti-cybersquatting Consumer Protection Act (ACPA), has awarded attorneys' fees against a cybersquatter in an in rem action (Agri-Supply Co v Agrisupply.com, 2006 US Dist LEXIS 69134, ED Va, September 11 2006). The ruling is significant because remedies for in rem actions are usually limited to a court order for the forfeiture or transfer of the domain name to the owner of the mark pursuant to 15 USC § 1125(d)(2)(D)(i).

Agri-Supply Company Inc, a North Carolina corporation, owns the federally registered mark AGRI SUPPLY. As its name and mark suggest, it sells farm and hardware equipment through a chain of retail stores in the southeast United States and through its website at 'www.Agri-Supply.com'. In 2005 it filed an ACPA and trademark infringement action in the US District Court for the Eastern District of Virginia against the domain name 'www.AgriSupply.com', registered to a Cayman Island serial cybersquatter, Cayman Web Development. Agri-Supply, which had filed suit in the jurisdiction where the domain name's registry was based, published notice of its suit in the Caymanian Compass (a local newspaper), giving any interested party the opportunity to respond to its complaint; it thereby established in rem jurisdiction over the domain name to the satisfaction of the court. When no one responded to the suit, Agri-Supply moved for judgment by default. In so doing, it asked the court not only for forfeiture of the offending domain name, but also for court costs and reasonable attorneys' fees.

The issue presented to the court was whether, in an ACPA action where the court had established in rem jurisdiction over an infringing domain name, but had not established in personam jurisdiction over the registrant of that domain name, the court could go beyond the usual remedy of forfeiture and impose a monetary judgment for costs, damages, and/or attorneys' fees against the registrant.

On consideration of this novel issue, the court held that 15 USC § 1117(a), the section that governs remedies under the Lanham Act, expressly encompassed actions under the ACPA. The ACPA states at 15 USC § 1125(d)(3) that any remedy for an in rem action shall be in addition to any other civil action or remedy otherwise applicable. One such remedy provided by § 1117(a) entitles plaintiffs in § 1125(d) ACPA cases to recover reasonable attorneys' fees in exceptional cases. Although one would ordinarily expect a plaintiff to obtain personal jurisdiction over a registrant before obtaining a monetary judgment, the court observed that § 1117(a) makes no explicit distinction between cases brought under in personam or in rem jurisdiction. Therefore, according to the court, a plaintiff who obtains a judgment against a domain name in an ACPA in rem proceeding may also recover costs, damages and attorneys' fees from the registrant of the infringing domain name. In the case at hand, the registrant's serial cybersquatting, its multiple Uniform Domain Name Dispute Resolution Policy losses, and its "wilful defiance and protraction of the judicial processes", evidenced by its failure to respond to Agri-Supply's cease and desist letters or lawsuit, all amounted to wilful, deliberate and bad-faith conduct, sufficient to render the case "exceptional" and warrant imposition of attorneys' fees.

This case represents an intriguing and potentially important interpretation of the legal remedies available in ACPA in rem actions. While the ACPA itself only expressly provides for forfeiture and transfer of domain names in in rem actions, the court's interpretation of § 1125(d)(3) and § 1117(a) markedly expands the range of available remedies. Such an interpretation could become a useful tool to discourage offshore cybersquatters, such as the one in this case, from targeting US businesses and registered marks. Previously, these offshore cybersquatters, secure in their geographic immunity from in personam actions, could register hundreds of infringing domain names and incur no more risk than having to relinquish some of them. But now these cybersquatters may be ordered to relinquish money as well - an added financial risk that they may not wish to incur.

Additionally, by allowing attorneys' fees, the court's ruling increases the incentive for victims of cybersquatting to pursue in rem actions under the ACPA - knowing that an award of attorneys' fees is possible. While it may be difficult to recover attorneys' fees in certain in rem actions under the ACPA due to the particular nature of each case, and the high standards that must be met to warrant the "exceptional" award of such fees, the court has provided plaintiffs with an additional tool with which to fight serial offshore cybersquatters under the ACPA.

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