Re-registration of domain name is not ‘registration’ under ACPA

United States of America

The Anti-cybersquatting Consumer Protection Act (ACPA) establishes that:

a person shall be liable in a civil action by the owner of the mark… if… that person (i) has a bad-faith intent to profit from that mark… and (ii) registers, traffics in, or uses a domain name that…, in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark…” (15 USC § 1125(d)(1)(A) (emphasis added)

According to the decision of the US Court of Appeals for the Ninth Circuit in GoPets Ltd v Hise (Case 08-56110, September 22 2011), the term 'registration' applies only to the initial registration of a domain, and not to a re-registration.

The story of this case begins in 1999, when Edward Hise registered the domain name 'gopets.com'. Hise made no attempts to use 'gopets.com' from its registration in 1999 to 2004. In 2004 the company GoPets Ltd was founded in South Korea, and filed an application in the United States to register GOPETS as a trademark for online computer games with virtual pets. Registration was granted by the US Patent and Trademark Office in 2006.

From 2004 GoPets made numerous attempts to buy 'gopets.com' from Hise, without success. Losing patience, GoPets filed a Uniform Domain Name Dispute Resolution Policy (UDRP) complaint against Hise with the World Intellectual Property Organisation (WIPO). The WIPO arbitrator ruled in favour of Hise, though, because the UDRP requires a complainant to show that a domain name was registered in bad faith, and Hise registered 'gopets.com' years before GoPets was founded or had rights in the GOPETS mark. Just after the WIPO decision, GoPets offered to buy 'gopets.com' for $40,000, but Hise countered with a demand for $5 million.

After sending his demand letter, Hise transferred 'gopets.com' to his company, Digital Overture. At the end of 2006 Hise registered additional domains similar to 'gopets.com', such as 'gopets.mobi' and 'gopets.name', among many others.

In 2007 GoPets filed suit against Hise and his California corporation, Digital Overture, in the US District Court for the Central District of California, alleging cybersquatting under ACPA, trademark infringement, unfair competition and other related claims. It later amended the complaint to add the additional domains as soon as it learned of their existence. GoPets conceded that Hise’s initial registration of 'gopets.com' in 1999 preceded its use and registration of its GOPETS mark, but alleged that the re-registration of the domain by Digital Overture in 2006 violated ACPA.

In 2008 the Central District of California granted GoPets’ motion for summary judgment on its ACPA and Lanham Act claims, holding that the re-registration by Hise’s company was a registration in the context of ACPA. Hise timely appealed, and the Ninth Circuit reviewed the grant of summary judgment de novo.

The Ninth Circuit found that ACPA did not define 'registration', and that later actions taken with a domain name registration (eg, its renewal or transfer) might conceivably constitute 'registration'. Yet it reversed the Central District of California's decision. The court reasoned:

Looking at ACPA in light of traditional property law, however, we conclude that Congress meant ‘registration’ to refer only to the initial registration. It is undisputed that Edward Hise could have retained all of his rights to 'gopets.com' indefinitely if he had maintained the registration of the domain name in his own name. We see no basis in ACPA to conclude that a right that belongs to an initial registrant of a currently registered domain name is lost when that name is transferred to another owner. The general rule is that a property owner may sell all of the rights he holds in property. GoPets Ltd's proposed rule would make rights to many domain names effectively inalienable, whether the alienation is by gift, inheritance, sale or other form of transfer. Nothing in the text or structure of the statute indicates that Congress intended that rights in domain names should be inalienable.” (page 18,020 (emphasis added))

With respect to the additional domain names that Hise registered after GoPets’ mark was already distinctive, the Ninth Circuit affirmed the district court's finding that such domains were registered in bad faith “to achieve ‘commercial gain’ by confusing consumers and diverting them from the website they intended to access” (page 18,022).

Accordingly, the Ninth Circuit set aside the district court’s $100,000 award in connection with the re-registration of 'gopets.com', but affirmed the award of $1,000 granted by the district court for each of the additional domains. Similarly, the transfer of the domain 'gopets.com' was reversed, while the transfer of the additional domains was affirmed.

The GoPets decision makes sense as applied to the facts of that case: Hise registered 'gopets.com' five years before the trademark owner began using its mark, and there was no evidence that the initial registration was in bad faith. It would not make sense - and would not be applicable - in cases where subsequent registrations effectuate bad-faith trafficking or use of a domain name. The ACPA redresses not only bad-faith initial registrations, but bad-faith trafficking or use of a domain name (15 USC § 1125(d)(1)(A)), which may be effected by subsequent registrations.

For example, in Schmidheiny v Weber (319 F3d 581 (3d Cir 2003)), cited in GoPets, the registrant purposely registered the surname of a billionaire, and then offered to sell the domain name to him. As in GoPets, the registrant transferred the domain name to his own company. The Third Circuit, reviewing a related part of the ACPA, held that:

the language of the statute does not limit the word ‘registration’ to the narrow concept of ‘creation registration’… We hold that the word ‘registration' includes a new contract at a different registrar and to a different registrant.”

To conclude otherwise, the Third Circuit held, would permit improper domain names to be sold and purchased ad infinitum.

GoPets also does not address the closer question presented when a market-savvy cybersquatter learns of a prospective, impending business venture and rushes out to register domain names relating to that venture, just before it is launched. Such situations have been addressed in the UDRP, with decisions favourable to trademark owners. To reduce the risk of anticipatory cybersquatting, businesses are well advised to apply to register their trademarks on an intent-to-use basis and to register corresponding domain names as early as possible, before launching their new venture. Otherwise this decision may reward the establishment of a marketplace in which hostage domain names are commercialised among cybersquatters.

James L Bikoff, David K Heasley, Philip V Marano and Ricardo D Nunes, Silverberg Goldman & Bikoff LLP, Washington DC

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