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. e du/thir dc ir c uit_2001/131Filed June 15, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 00-2236

JOSEPH C. SHIELDS, individually and trading as THE JOE CARTOON

COMPANY

v.

JOHN ZUCCARINI, individually and trading as CUPCAKE CITY;
NETWORK SOLUTIONS, INC.; INTERNET CORPORATION, FOR

ASSIGNED NAMES AND NUMBERS

John Zuccarini, Individually and trading as Cupcake City,

Appellant

Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 00-cv-00494) District Judge: Honorable Stewart Dalzell

Argued: April 24, 2001

Before: BARRY, AMBRO and ALDISER T, Circuit Judges.

(Filed: June 15, 2001)

Howard M. Neu (Argued) 1152 North University Drive Pembroke Pines, Florida 33024

ATTORNEY FOR APPELLANTMichael P. Coughlin

William J. Levant (Argued)

KAPLIN STEWART MELOFF
REITER & STEIN, P.C. 350 Sentry Parkway, Building 640

P.O. Box 3037 Blue Bell, Pennsylvania 19422-1240

ATTORNEYS FOR APPELLEE

OPINION OF THE COURT

ALDISERT, Circuit Judge.

John Zuccarini appeals from the district court's gr ant of summary judgment and award of statutory damages and attorneys' fees in favor of Joseph Shields under th e new Anticybersquatting Consumer Protection Act ("ACPA" or "Act"). In this case of first impression in this co urt interpreting the ACPA, we must decide whether the d istrict court erred in determining that r egistering domain names that are intentional misspellings of distinctive or famous
names constitutes unlawful conduct under the Act. W e must decide also whether the district court abused its discretion by assessing statutory damages of $10,00 0 per domain name. Finally, we must decide whether the co urt erred in awarding attorneys' fees in favor of Shiel ds based on its determination that this case qualified as an "exceptional" case under the ACPA. W e affirm the j udgment
of the district court.

The district court had jurisdiction pursuant to 28 U.S.C. S 1331. This court has jurisdiction by virtue of 28 U.S.C.
SS 41 and 1291.

I.

Shields, a graphic artist from Alto, Michigan, crea tes,
exhibits and markets cartoons under the names "Joe
Cartoon" and "The Joe Cartoon Co." His cr eations i nclude the popular "Frog Blender," "Micro-Gerbil" and "Liv e and
Let Dive" animations. Shields licenses his cartoons to

2others for display on T-shirts, coffee mugs and oth er items,

many of which are sold at gift stores acr oss the c ountry. He
has marketed his cartoons under the "Joe Cartoon" l abel for the past fifteen years.

On June 12, 1997, Shields registered the domain nam e joecartoon.com, and he has operated it as a web sit e ever since. Visitors to the site can download his animat ions and purchase Joe Cartoon merchandise. Since April 1998, when it won "shock site of the day" from Macr omedia, Jo e Cartoon's web traffic has increased exponentially, now averaging over 700,000 visits per month.

In November 1999, Zuccarini, an Andalusia, Pennsylvania "wholesaler" of Internet domain names, 1 registered five world wide web variations on Shield s's site: joescartoon.com, joecarton.com, joescartons.com, joescartoons.com and cartoonjoe.com. Zuccarini's si tes
featured advertisements for other sites and for cre dit card companies. Visitors were trapped or"mousetrapped" i n the sites, which, in the jargon of the computer world, means that they were unable to exit without clicking on a
succession of advertisements. Zuccarini received be tween ten and twenty-five cents from the advertisers for every click.

In December 1999, Shields sent "cease and desist" l etters to Zuccarini regarding the infringing domain names. Zuccarini did not respond to the letters. Immediate ly after Shields filed this suit, Zuccarini changed thefive sites to "political protest" pages and posted the following message on them:

This is a page of POLITICAL PROTEST

- Against the web site joecartoon.com -

joecartoon.com is a web site that depicts th e mutilation and killing of animals in a shockwave based cartoon format -- many children are inticed [sic] to the web site, not knowing what is really there and t hen encouraged to join in the mutilation and kil ling

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1. "Wholesaling" refers to the practice of acquirin g multiple domain names with the intent to profit from them.

3through use of the shockwave cartoon pr esen ted to

them.

- Against the domain name policys [sic] of I CANN -

- Against the Cyberpiracy Consumer Protectio n Act -

As the owner of this domain name, I am being sued by joecartoon.com for $100,000 so he can use th is domain
to direct more kids to a web site that not o nly desensitizes children to killing animals, bu t makes it seem like great fun and games.

I will under no circumstances hand this doma in name
over to him so he can do that.

I hope that ICANN and Network Solutions will not assist him to attaining this goal.

-Thank YouShields v. Zuccarini, 89 F. Supp. 2d 634, 635-636 ( E.D. Pa. 2000).

Shields's Complaint invoked the ACPA as well as fed eral and state unfair competition law and sought injunct ive relief, statutory damages and attorneys' fees. The Complaint originally named Network Solutions, Inc. and the Internet Corporation for Assigned Names and Numbers as defendants, but on February 11, 2000, Shields filed a voluntary notice of dismissal with respect to these

defendants.

On March 17, 2000, the district court denied Shield s's Motion for Summary Judgment,2 holding that Zuccarin i

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2. With respect to Shields's Motion for Summary Jud gment on the ACPA claim, the district court noted the following:

(k) While this [Zuccarini's admission that h e registered variations of "joecartoon.com" because they were confus ingly similar]
would seem to be clear evidence of Zuccarini 's bad faith, he claims in his response to the motion for sum mary judgment
that his use of the variations was fair and lawful, and that he is using the domain names `for the purpose o f exercising his First Amendment rights of protest against th e Plaintiff 's domain which has objectionable and offensive materi al.'

4had raised a material issue of fact under the ACP A . After

affording the parties a brief time for expedited di scovery, the court held a hearing on Shields's request for i njunctive relief. On March 22, 2000, the court enter ed a pre liminary injunction in favor of Shields, which requir ed Zuc carini to transfer the infringing domain names to Shields and to refrain from "using or abetting the use of " the in fringing domain names or any other domain names substantiall y similar to Shields's marks.

On May 2, 2000, Shields filed a Renewed Motion for Summary Judgment. Zuccarini filed no response. On J une 5, 2000, the court entered an Order granting summar y judgment in favor of Shields, holding that Zuccarin i had registered five variations of Shields's name willfu lly, in bad faith, and in violation of the Act. On June 16, 200 0, Shields filed a Motion for Attorneys' Fees and Costs pursua nt to 15 U.S.C. S 1117(a). Zuccarini opposed the Motion cont ending that his conduct did not rise to the level of excep tional circumstances and that the injunction pr ovided Shi elds with adequate relief.

On July 18, 2000, the district court entered an Ord er and Judgment awarding statutory damages in the amou nt of $10,000 for each infringing domain name and atto r neys' fees and costs in the amount of $39,109.46. Zuccari ni filed a timely Notice of Appeal on July 26, 2000.

II.

We conduct plenary review of a grant of summary judgment, applying the same standard as the distric t court. Watson v. Eastman Kodak Co., 235 F .3d 851, 854 (3d Cir. 2000). "Summary judgment is properly granted if `th e pleadings, depositions, answers to interrogatories, and

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(l) We find that Zuccarini's claim of fair use creates a genuine issue of material fact precluding summary ju dgment at this point, particularly since he only recently r etained counsel and had not yet had a full opportunity to take d iscovery or
formulate his defense.

App. at 249 (emphasis added) (internal citations om itted).

5admissions on file, together with the affidavits, i f any, show

that there is no genuine issue as to any material f act and that the moving party is entitled to judgment as a matter of law.' " Celotex Corp. v. Catrett , 477 U.S. 317, 32 3 (1986) (quoting Rule 56(c), Federal Rules of Civil Pr oced ure). If the moving party meets the initial burden of showing th at there is no genuine issue of material fact, the bur den s hifts to the non-moving party to set forth specific facts showin g the existence of such an issue for trial. Rule 56(e), F ederal Rules of Civil Procedure. In reviewing the district court's grant of summary judgment, we must view the evidenc e in the light most favorable to the non-moving party. S ee Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). We review a trial court's award of statutory damage s for abuse of discretion. Nihon Keizai Shimbun, Inc. v. Comline Business Data, Inc., 166 F.3d 65, 74 (2d Cir. 1999) . Our review of the scope and the meaning of the ter m "exceptional," as used in 15 U.S.C. S 1117(a), is p lenary. Securacomm Consulting, Inc. v. Securacom, Inc., 224 F.3d 273, 279 (3d Cir. 2000).

III.

On November 29, 1999, the ACPA became law, making i t illegal for a person to register or to use with the "bad faith" intent to profit from an Internet domain name that is "identical or confusingly similar" to the distincti ve or famous trademark or Internet domain name of another person or company. See 15 U.S.C. S 1125(d) (Supp. 2 000). The Act was intended to prevent "cybersquatting," a n expression that has come to mean the bad faith, abu sive registration and use of the distinctive trademarks of others as Internet domain names, with the intent to profit from the goodwill associated with those trademarks. See S. Rep. No. 106-140 (1999), 1999 WL 594571, at *11-18. Unde r the ACPA, successful plaintiffs may r ecover statutory damages in an amount to be assessed by the district court i n its discretion, from $1,000 to $100,000 per domain name . See 15 U.S.C. S 1117(d) (Supp. 2000). In addition, succ essful plaintiffs may recover attorneys' fees in "exceptio nal" cases. See id. at S 1117(a).

6In Shields's Renewed Motion for Summary Judgment fo r

relief under the Act, he asked the district court t o (1) permanently enjoin Zuccarini from using the infring ing domain names and any other domain names substantial ly similar thereto; (2) direct Zuccarini to transfer t he infringing domain names to Shields; and (3) awar d attorneys' fees and statutory damages under 15 U.S. C. S 1117(a) and (d), respectively.

In deciding whether to grant a permanent injunction , the district court must consider whether: (1) the movin g party has shown actual success on the merits; (2) the mov ing party will be irreparably injured by the denial of injunctive relief; (3) the granting of the permanent injunctio n will result in even greater harm to the defendant; and ( 4) the injunction would be in the public interest. See ACL U v. Black Horse Pike Reg'l Bd. of Educ., 84 F .3d 1471, 1477 nn. 2-3 (3d Cir. 1996).

A.

To succeed on his ACPA claim, Shields was required to prove that (1) "Joe Cartoon" is a distinctive or fa mous mark entitled to protection; (2) Zuccarini's domain name s are "identical or confusingly similar to" Shields's mar k; and (3) Zuccarini registered the domain names with the bad faith intent to profit from them. See 15 U.S.C. S 1125 (d )(1)(A); cf. Sporty's Farm L.L.C. v. Sportsman's Market Inc., 20 2 F.3d 489, 497-499 (2d Cir. 2000).3

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3. Section 1125(d)(1)(A) of the Act provides in rel evant part:

A person shall be liable in a civil action b y the owner of a mark .

. . if, without regard to the goods or services of the parties, that

person

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

(ii) registers, traffics in, or uses a domai n name that --

(I) in the case of a mark that is dist in ctive at the time of registration of the domain name, is identica l or confusingly similar to that mark;

(II) in the case of a famous mark that is famous at the time of registration of the domain name, is ident ical or confusingly similar to or dilutive of that m ark.71.

Under S 1125(d)(1)(A)(ii)(I) and (II), the district court first
had to determine if "Joe Cartoon" is a"distinctive" or "famous" mark and, therefore, is entitled to protec tion under the Act. The following factors may be conside r ed when making this inquiry:

(A) the degree of inherent or acquir ed dist inctiveness of the mark; (B) the duration and extent of use of the mark in connection with the goods or service s with which the mark is used; (C) the duration and extent of advertising and publicity of the mark; (D) t he geographical extent of the trading area in w hich the mark is used; (E) the channels of trade for the goods or services with which the mark is used; (F) th e degr ee of recognition of the mark in the trading ar ea s and channels of trade used by the marks' owner a nd the person against whom the injunction is sought ; (G) the
nature and extent of use of the same or simi lar marks by third parties.

15 U.S.C. S 1125(c)(1).

Shields runs the only "Joe Cartoon" operation in th e nation and has done so for the past fifteen years. This suggests both the inherent and acquired distinctive ness of the "Joe Cartoon" name. In addition to using the "J oe Cartoon" name for fifteen years, Shields has used t he domain name joecartoon.com as a web site since June 1997 to display his animations and sell products fe aturing his drawings. The longevity of his use suggests tha t"Joe Cartoon" has acquired some fame in the marketplace. The New York Times ran a page one story that quoted Shi elds and cited Joe Cartoon. See Andrew Pollack, Show Bus iness Embraces the Web, But Cautiously, N.Y . Times, Nov. 9, 1999, at A1.

Joe Cartoon T-shirts have been sold acr oss the cou ntry since at least the early 1990s, and its products ap pear on the web site of at least one nationally known r eta il chain, Spencer Gifts. Shields has advertised in an online humor magazine with a circulation of about 1.4 million. T he Joe Cartoon web site receives in excess of 700,000 visi ts per month, bringing it wide publicity. According to Shi elds,

8word-of-mouth also generates considerable inter est in the

Joe Cartoon site. Shields trades nationwide in both real and virtual markets. The web site gives Joe Cartoon a global reach. Shields's cartoons and mer chandise a re marketed on the Internet, in gift shops and at tour ist venues. The Joe Cartoon mark has won a huge followi ng because of the work of Shields. In light of the abo ve, we conclude that "Joe Cartoon" is distinctive, and, wi th 700,000 hits a month, the web site "joecartoon.com" qualifies as being famous. Therefore, the trademark and domain name are protected under the ACP A.

2.

Under the Act, the next inquiry is whether Zuccarin i's domain names are "identical or confusingly similar" to Shields's mark. The domain names --joescartoon.com, joecarton.com, joescartons.com, joescartoons.com an d cartoonjoe.com -- closely resemble "joecartoon.com, " with a few additional or deleted letters, or, in the last domain name, by rearranging the order of the wor ds. To di vert Internet traffic to his sites, Zuccarini admits tha t he registers domain names, including the five at issue here, because they are likely misspellings of famous mark s or personal names.4 The strong similarity between thes e domain names and joecartoon.com persuades us that t hey are "confusingly similar." Shields also produced ev idence of Internet users who were actually confused by Zuccar ini's sites. See, e.g., Pltf 's Exh. 22, at [4] (copy of an email stating, "I tried to look up you[r] website yesterd ay afternoon and a protest page came up. W ill I have trouble entering the site at times because of this?").

On appeal, Zuccarini argues that registering domain names that are intentional misspellings of distinct ive or famous names (or "typosquatting," his ter m for thi s kind of conduct) is not actionable under the ACPA. Zuccarin i contends that the Act is intended to prevent

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4. Zuccarini testified that he was amazed to learn that "people mistype [domain names] as often as they do," and thus varia nts on likely search names would result in many unintended visitors to h is sites. Shields, 89 F. Supp. 2d at 640.

9"cybersquatting," which he defines as r egistering someone's

famous name and trying to sell the domain name to t hem or registering it to prevent the famous person from using it themselves. This argument ignores the plain languag e of the statute and its stated purpose as discussed in the legislative history.

The statute covers the registration of domain names that are "identical" to distinctive or famous marks, but it also covers domain names that are "confusingly similar" to
distinctive or famous marks. See 15 U.S.C. S 1125(d)(1)(A)(ii)(I), (II). A reasonable interpre tation of conduct covered by the phrase "confusingly similar" is the intentional registration of domain names that are misspellings of distinctive or famous names, causin g an Internet user who makes a slight spelling or typing error to reach an unintended site. The ACPA's legislative hi story contemplates such situations:

[C]ybersquatters often register well-known m arks to prey on consumer confusion by misusing the d omain
name to divert customers from the mark owner 's site to the cybersquatter's own site, many of which ar e pornography sites that derive advertising r evenue based on the number of visits, or "hits," th e site receives. For example, the Committee was inf or med of a parent whose child mistakenly typed in the domain name for `dosney.com,' expecting to access t he family- oriented content of the Walt Disney home pag e, only to end up staring at a screen of hardcor e porn ography because a cybersquatter had registered that domain name in anticipation that consumers would ma ke that
exact mistake.

S. REP. NO. 106-140 (1999), 1999 WL 594571, at *15 (emphasis added).

Although Zuccarini's sites did not involve por nogr aphy,
his intent was the same as that mentioned in the le gislative history above -- to register a domain name in antic ipation that consumers would make a mistake, thereby increa sing the number of hits his site would receive, and, consequently, the number of advertising dollars he would gain. We conclude that Zuccarini's conduct here is a classic

10example of a specific practice the ACPA was designe d to

prohibit. The district court properly found that th e domain names he registered were "confusingly similar."

3.

The final inquiry under the ACPA is whether Zuccari ni acted with a bad faith intent to profit fr om Shiel ds's
distinctive and famous mark or whether his conduct falls under the safe harbor provision of the Act. Section 1125(d)(1)(B)(i) provides a non-exhaustive list of nine factors for us to consider when making this deter m ination:

(I) the trademark or other intellectual prop erty rights of the person, if any, in the domain name; (II) the extent to which the domain name consists of the leg al name of the person or a name that is otherwise co mmonly used to identify that person; (III) the pers on's prior use, if any, of the domain name in connection wit h the bona fide offering of any goods or services; (IV) the person's
bona fide noncommercial or fair use of the m ark in a site accessible under the domain name; (V) t he person's intent to divert consumers from the mark
owner's online location to a site accessible under the domain name that could harm the goodwill r e presented by the mark, either for commercial gain or w ith the intent to tarnish or disparage the mark, by cr eating a likelihood of confusion as to the source, sp onsorship, affiliation, or endorsement of the site; (VI ) the person's offer to transfer, sell, or otherwise assign the domain name to the mark owner or any third party fo r financial gain without having used, or havin g an intent to use, the domain name in the bona fide of fering of any goods or services, or the person's prior conduct indicating a pattern of such conduct; (VII) the person's provision of material and misleading false c ontact information when applying for the registrati on of the domain name, the person's intentional failur e to maintain accurate contact information, or th e person's prior conduct indicating a pattern of such c onduct; (VIII) the person's registration or acquisit ion of multiple domain names which the person knows are iden tical or confusingly similar to marks of others that ar e

11distinctive at the time of registration of s uch domain

names, or dilutive of famous marks of others that ar e famous at the time of registration of such d omain names, without regard to the goods or servic es of the parties; and (IX) the extent to which the ma rk incorporated in the person's domain name reg istration
is or is not distinctive and famous within t he meaning of subsection (c)(1) of this section.

Zuccarini's conduct satisfies a number of these fac tors. Zuccarini has never used the infringing domain name s as trademarks or service marks; thus, he has no intell ectual property rights in these domain names. See id. at ( B)(i)(I). The domain names do not contain any variation of th e legal name of Zuccarini, nor any other name commonly used to identify him. See id. at (B)(i)(II). Zuccarini has never used the infringing domain names in connection with the bona fide offering of goods or services. See id. at (B)( i)(III). He
does not use these domain names for a non-commer ci al or "fair use" purpose. See id. at (B)(i)(IV). He delib erately
maintains these domain names to divert consumers fr om Shields's web site. In so doing, he harms the goodw ill
associated with the mark. He does this either for commercial gain, or with the intent to tar nish or disparage Shields's mark by creating a likelihood of confusio n. See id. at (B)(i)(V). He has knowingly register ed thousand s of Internet domain names that are identical to, or con fusingly similar to, the distinctive marks of others, withou t the permission of the mark holders to do so.5 See id. a t

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5. During his deposition and at the preliminary inj unction hearing, Zuccarini admitted that he registered the variation s of "Joe Cartoon," as well as thousands of other domain names, because th ey are confusingly similar to others' famous marks or personal names-- and thus are likely misspellings of these names -- in an effort to dive rt Internet traffic to
his sites. He has registered obvious misspellings of ce lebrities' names, such as gwenythpaltrow.com, rikymartin.com, and britiney spears.com. He has also registered variations on popular pr oduct and web site names, like sportillustrated.com, mountianbikes.com, and msncha trooms.com. Although we do not determine whether Zuccarini's co nduct in each of these other cases is itself a violation of the Act, nonetheless his
pattern
of behavior is consistent with a bad faith intent t o profit. See Northern Light Tech., Inc. v. Northern Lights Club, 236 F.3d 57, 65 (1st Cir. 2001).

12(B)(i)(VIII). We have already established that Shie lds's mark

is distinctive and famous. See id. at (B)(i)(IX).

Zuccarini argues that his web sites wer e protected by theFirst Amendment because he was using them as selfdescribed "protest pages." Therefor e, he contends, his use falls under the safe harbor provision of S 1125(d)( 1)(B)(ii), which states that "[b]ad faith intent . . . shall n ot be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use
of the domain name was a fair use or otherwise lawf ul." The district court rejected this argument based on its conclusion that Zuccarini's claim of good faith and fair use was a "spurious explanation cooked up pur ely for t his suit." Shields, 85 F. Supp. 2d at 640. W e agree.

Zuccarini used his "Joe Cartoon" web sites for pure ly commercial purposes before Shields filed this actio n. Zuccarini was on notice that his use of the domain names was considered unlawful when he received the cease and
desist letters from Shields in December 1999. Zucca rini continued to use the infringing domain names for commercial purposes until Shields filed this lawsui t. Zuccarini testified that he put up the protest page s at 3:00 a.m. on February 1, 2000, just hours after being se rved with Shields's Complaint. Thus, by his own admissio n, Zuccarini submits that his alleged "fair use" of th e offending domain names for "political pr otest" beg an only after Shields brought this action alleging a violat ion of the ACPA. We are aware of no authority providing that a
defendant's "fair use" of a distinctive or famous m ark only after the filing of a complaint alleging infringeme nt can absolve that defendant of liability for his earlier unlawful activities. Indeed, were there such authority we th ink it would be contrary to the orderly enforcement of the trademark and copyright laws.

We conclude that the district court pr operly rejec ted Zuccarini's argument that his web sites wer e prote cted under the safe harbor provision. There was sufficie nt
evidence for the district court to find that Zuccar ini acted with a bad faith intent to profit when he r egister ed and
used the five domain names at issue here.

13B.

The district court correctly concluded that there i s a substantial likelihood of confusion, as well as act ual evidence of confusion, between Zuccarini's infringi ng domain names and the "Joe Cartoon" mark. In Opticia ns Ass'n v. Indep. Opticians, 920 F.2d 187, 196 (3d Ci r. 1990), a trademark infringement case, we held that a findi ng of irreparable injury can be based on a finding of a l ikelihood
of confusion. The district court determined that Sh ields will suffer damage to his reputation and a loss of goodw ill if Zuccarini is allowed to operate his offending web s ites. Shields's livelihood and fame depend, in lar ge par t, on Internet users being able to access his sites, and he does not want his audience trapped in Zuccarini's sites or put off by images displayed thereon which they may attribut e to him. The district court properly determined that Sh ields would be irreparably harmed if the court did not gr ant the permanent injunction.

Zuccarini testified that he has more than thr ee th ousand web sites and earns between $800,000 and $1,000,000 a year from their use. The court determined that any economic harm from the loss of the five infringing domain names would be trivial. In Opticians Ass'n, 920 F.2 d at 197, this court held that, in trademark cases, "public i nterest . . . is a synonym for the right of the public not to be
deceived or confused." Zuccarini admitted that he i s in the business of profiting from the public's confusion a nd that he does, in fact, profit from this confusion. The d istrict court properly concluded that this injunction would be in the public interest.

The district court did not err in determining that the elements for granting a permanent injunction set fo rth in ACLU v. Black Horse Pike Reg'l Bd. of Educ., 84 F.3 d 1471, 1477 nn. 2-3 (3d Cir. 1996) were satisfied, thereby entitling Shields to a permanent injunction and summary judgm ent
on his ACPA claim.

IV.

The Act provides for statutory damages for a violat ion of S 1125(d)(1) "in the amount of not less than $1,000 and not

14more than $100,000 per domain name, as the court

considers just." 15 U.S.C. S 1117(d). Zuccarini arg ues that S 1117(d) does not apply to him because he r egiste red the offending domain names before the ACP A became law. The
district court held that Zuccarini's continued use of the domain names after November 29, 1999 subjects him t o the statute's proscriptions and remedies. W e agree wit h the teachings of Virtual Works, Inc. v. Volkswagen of A merica, Inc., 238 F.3d 264, 268 (4th Cir. 2001) ("A person who unlawfully registers, traffics in, or uses a domain name after the ACPA's date of enactment, November 29, 19 99, can be liable for monetary damages . . . .") (empha sis added); and E. & J. Gallo Winery v. Spider Webs Ltd ., 129 F. Supp. 2d 1033, 1047-1048 (S.D. Tex. 2001) (holdi ng that defendant who registered domain name in bad faith c ould be held liable for statutory damages even though registration was prior to enactment of the ACP A wh en defendant continued to use web site after the enact ment of the Act).

In the alternative, Zuccarini argues that he only u sed the web site for sixty days after the passage of the AC P A and prior to this lawsuit being filed. He implies that, because he only used the web site for a short period of time, the district court's assessment of statutory damages wa s punitive in nature. Under the statute, the court ha s the discretion to award statutory damages that it "cons iders just" within a range from $1,000 to $100,000 per in fringing domain name. See 15 U.S.C. S 1117(d). There is noth ing in the statute that requires that the court consider t he duration of the infringement when calculating statu tory damages. We conclude that the district court proper ly exercised its discretion in awarding $10,000 for ea ch infringing domain name.

V.

The ACPA provides that "[t]he court in exceptional cases may award reasonable attorney fees to the prevailin g party." 15 U.S.C. S 1117(a). In trademark infringem ent cases, this court has held that "a district court m ust make a finding of culpable conduct on the part of the lo sing party, such as bad faith, fraud, malice or knowing

15infringement before a case qualifies as `exceptiona l.' "

Ferrero U.S.A., Inc. v. Ozak T rading, Inc., 952 F. 2d 44, 47 (3d Cir. 1991). The district court found that Zucca rini acted willfully and in bad faith when he register ed the "Joe Cartoon" domain names in an effort to confuse peopl e and
to divert Internet traffic to his web sites for his own economic gain. The court found that Zuccarini condu cted
no bona fide business related to Joe Cartoon and th at he
had no basis on which to believe his use of the dom ain
names was fair and lawful.

Although the term "bad faith" is written into S 1125(d)(1)(A)(i) such that it is a thr eshold fin ding for any violation of the ACPA, we are persuaded that the di strict court made a proper finding that, under the circums tances, this case qualified as "exceptional" and merited th e award of attorneys' fees under S 1117(a). 6 The record in dicates that Zuccarini's conduct was particularly flagrant 7 and that
he showed no remorse for his actions. The court sta ted that "based on the egregiousness of Zuccarini's conduct and his lack of contrition, we without hesitation hold that this is an `exceptional' case and that Shields was entitled to an award of attorneys' fees." App. at A25. The court's inter pretation of what constitutes an "exceptional" case under the ACPA is

proper.

We have considered all contentions pr esented by th e parties and conclude that no further discussion is

necessary.

The judgment and the award of statutory damages and attorneys' fees will be affirmed.

___________________________________________________ ______________

6. In determining that this case is "exceptional" u nder S 1117(a), we do so without deciding whether the finding of "bad fai th" under S 1125(d)(1)(A)(i) automatically warrants an award of attorneys' fees under S 1117(a) and the case law that has interpret ed that provision. See Ferrero U.S.A., Inc., 952 F .2d at 47.

7. Between the issuance of the March 22, 2000 preli minary injunction, through the date of the determination that he viola ted the ACPA, and up until the date of the hearing to determine statutor y damages and attorneys' fees and costs, Zuccarini r egistered an additional 1,644 domain names that were common misspellings of other famous companies' and/or celebrities' names.

16A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

17