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Tag Archives: Bad Faith

Lewis & Lin Defends Scentco.com Domain in UDRP

In a victory for our client, an individual domain name investor, Lewis & Lin obtained a decision by the National Arbitration Forum refusing to transfer the Scentco.com domain name to the holder of the “Scentco” registered U.S. trademark.

The complainant, Scentco Inc., a distributor of scented toys and novelties, argued that our client violated the Uniform Domain Name Dispute Resolution Policy by registering and using the domain name in bad faith. Before a three-member panel of the NAF, Lewis & Lin argued that our client could not have registered the domain in bad faith because he had first registered it in 2001—twelve years before the complainant ever used the Scentco mark in commerce. The panel also agreed with Lewis & Lin that subsequent renewals of the domain name did not amount to a re-registration under the UDRP.

The complainant had also argued that our client’s use of the domain name to resolve to a website that linked to various third party vendors—some of which competed in business with the complainant—amounted to bad faith use. However, the panel agreed with Lewis & Lin that despite some authority suggesting that a registrant is responsible for all content appearing on a website at its domain name, the respondent here did not target the complainant’s trademark or business either before or after he registered the domain. Accordingly, the panel denied the relief sought by the complainant and ruled that the Scentco.com domain name stay with our client.

The case is Scentco, Inc. v. Sandfort, FA1406001565772 (N.A.F. Aug. 2, 2014) and can be accessed here.

When is a registration not a registration under the ACPA?

Recently, the Ninth Circuit created an apparent circuit split in its ruling in GoPets Ltd. v. Hise, No. 08-56110 (9th Cir. Sept. 22, 2011) on the issue of bad faith domain name registration under the Anti-Cybersquatting Consumer Protection Act.

The ACPA provides that:

(A) A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person

(i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and

(ii) registers, traffics in, or uses a domain name that—

(I) 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 U.S.C. § 1125(d)(1) (emphasis added).  Thus, to prevail on an ACPA claim, a plaintiff must show (1) registration of a domain name, (2) that was “identical or confusingly similar to” a mark that was distinctive at the time of registration, and (3) “bad faith intent” at the time of registration. See 15 U.S.C. § 1125(d)(1).

The question in GoPets was what counts as a “registration.”  Is it only the initial registration of a domain name by the very first registrant, or does it also include subsequent renewal registrations by other parties who came to acquire the domain name at issue?  If it includes subsequent renewals, then those renewals must independently be in good faith.

The only other appellate court to consider the issue was the Third Circuit in Schmidheiny v. Weber, 319 F.3d 581 (3d Cir. 2003).  In Schmidheiny, which was decided under the ACPA’s personal name cybersquatting provision (15 U.S.C. § 8131 (then § 1129)), defendant Weber, the original registrant of the domain name <schmidheiny.com>, registered the name in February 1999, several months before the ACPA went into effect.  In June 2000, after the Act went into effect, Weber transferred the domain name to a corporation of which he was the president and treasurer.  The corporation then re-registered the domain name with a different registrar.  In November 2000, Weber offered to sell the domain name, now owned by the corporation, to plaintiff Schmidheiny.

The district court in Schmidneiny held that re-registering the domain name to the corporation was not a registration within the meaning of § 8131 and therefore did not newly subject the domain name to the ACPA’s provisions.  The Third Circuit disagreed, holding that “the word ‘registration’ includes a new contract at a different registrar and to a different registrant.”  319 F.3d at 583.  The reason for this, according to the court, was that “the language of the statute does not limit the word ‘registration’ to the narrow concept of ‘creation registration.’”  Id.

Against this precedent, the Ninth Circuit was confronted with same issue for § 1125.  The court, however, declined to follow the Third Circuit’s reasoning.  Instead, it chose to view the provision of the ACPA in light of traditional property law and concluded that “Congress meant ‘registration’ to refer only to the initial registration.”  In so ruling, the court reasoned:

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.

As one would expect, GoPets creates some confusion about the reach of the ACPA.  Should domain names be treated as property, such that owners are free to transfer them to third parties together with all the attendant rights that have been acquired as a result of registration?  Or should they be more like individual contracts with registrars, the terms of which may vary upon each subsequent registration with a different registrar or registrant.  It remains to be seen which view will ultimately be seen as the prevailing one.

 In the meantime, both domainers and trademark holders need to be aware of the potential effects of the ACPA.  For more information about how cybersquatting law affects your business, contact the internet attorneys at Lewis & Lin LLC.