Opinion ID: 614071
Heading Depth: 3
Heading Rank: 2

Heading: ACPA Claims

Text: We begin with the text of the statute. United States v. Nader, 542 F.3d 713, 717 (9th Cir.2008). 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). ACPA applies to all domain names, whether registered before or after the enactment of the statute. See Sporty's Farm L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 496-97 (2d Cir.2000) (citing Pub.L. No. 106-113, § 3010, 113 Stat. 1536). To prevail on its ACPA claim, Go-Pets Ltd. 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). At issue in this case is what counts as registration. We first discuss the registration and re-registration of gopets.com. We then discuss the registration of the Additional Domains.
GoPets Ltd. concedes that the gopets.com domain name was not identical or confusingly similar to a protected mark when Edward Hise registered it in 1999. GoPets Ltd. contends, however, that the term registration in ACPA includes re-registrations as well as initial registrations. It contends that the re-registration of the domain name by Digital Overture in December 2006, after Edward Hise transferred it, was a registration within the meaning of § 1125(d)(1). Since the service mark GoPets was distinctive in 2006, Go-Pets Ltd. argues that the 2006 re-registration violated ACPA. The district court agreed with GoPets Ltd.'s argument that a re-registration is a registration within the meaning of § 1125(d)(1). For the reasons that follow, we disagree with the district court. We have previously explained: [T]here are three primary actors in the domain name system. First, companies called registries operate a database (or registry) for all domain names within the scope of their authority [e.g., all .com, .net, .gov, etc. domain names]. Second, companies called registrars register domain names with registries on behalf of those who own the names. Registrars maintain an ownership record for each domain name they have registered with a registry. Action by a registrar is needed to transfer ownership of a domain name from one registrant to another. Third, individuals and companies called registrants own the domain names. Registrants interact with the registrars, who in turn interact with the registries. Office Depot Inc. v. Zuccarini, 596 F.3d 696, 699 (9th Cir.2010). When an individual registrant registers a domain name, she pays the registrar a fee and gives the registrar a registrant name, along with contact, billing, and technical information. The words registration and register are not defined in ACPA. It is obvious that, under any reasonable definition, the initial contract with the registrar constitutes a registration under ACPA. It is less obvious which later actions, if any, are also registrations. After registering, a registrant can take a variety of actions that modify the registration. For instance, the registrant can update the registration if her contact or billing information changes. She can switch to private registration, where a third party's name is substituted for hers in the public databases of domain registrants. She can switch between registrars, but leave her contact and billing information unchanged. A registrant can change the name of the registrant without changing who pays for the domain, or a registrant can transfer both the domain and payment responsibilities to someone else. Even if the registrant does none of these things, she must still renew the registration periodically. All of these actions could conceivably be described as registrations within the meaning of § 1125(d)(1). Only one other circuit has addressed the question of re-registrations under ACPA. In Schmidheiny v. Weber, 319 F.3d 581 (3d Cir.2003), Steven Weber registered the domain name schmidheiny.com in February 1999. Stephan Schmidheiny is one of the wealthiest men in the world. ACPA became law in November 1999. In June 2000, Weber transferred ownership of 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 Stephan Schmidheiny. Id. at 581-82. At issue in Schmidheiny was a registration under 15 U.S.C. § 8131(1)(A) (then § 1129(1)(A)). Section 8131(1)(A) prohibits registration of domain names that are the names of, or that are substantially and confusingly similar to the names of, living persons. Like § 1125(d)(1), § 8131(1)(A) refers to registration without defining the term. The district court had held that re-registering the domain name to the corporation was not a registration within the meaning of § 8131(1)(A). Id. at 582. The Third Circuit disagreed, holding that the word `registration' includes a new contract at a different registrar and to a different registrant. Id. at 583. The Third Circuit assumed that Weber's initial registration of schmidheiny.com was not covered by § 8131(1)(A) because it had been made before the passage of ACPA. See id. at 581-82. Based on that assumption, the Third Circuit was concerned that holding that re-registration was not registration within the meaning of ACPA would permit the domain names of living persons to be sold and purchased without the living persons' consent, ad infinitum, so long as the name was first registered before the effective date of the Act. Id. However, we believe that the Third Circuit erred in assuming that Weber's initial registration was not covered by ACPA. We agree with the holding of the Second Circuit in Sporty's Farm that § 1125(d)(1) and, by extension, § 8131(1)(A)apply to registrations made before the passage of ACPA. See Sporty's Farm, 202 F.3d at 496-97. If Weber's initial registration violated § 8131(1)(A), as we would hold it did, the Third Circuit's concern evaporates. Like the text of § 8131(1)(A), the text of § 1125(d)(1) considered in isolation does not answer the question whether registration includes re-registration. 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. We therefore hold that Digital Overture's re-registration of gopets.com was not a registration within the meaning of § 1125(d)(1). Because Edward Hise registered gopets.com in 1999, long before GoPets Ltd. registered its service mark, Digital Overture's re-registration and continued ownership of gopets.com does not violate § 1125(d)(1).
We turn now to the Additional Domains. Unlike gopets.com, these domain names were registered at a time when the GoPets mark was distinctive. The question is whether they were registered in bad faith under § 1125(d)(1). The district court found that the Hises' registration of the Additional Domains was in bad faith. The district court based its finding in part on the fact that the Hises had used the Additional Domains as leverage to increase the price they could obtain for gopets.com, a domain name whose re-registration, in the view of the district court, violated ACPA. As just discussed, the re-registration of gopets.com did not violate ACPA. However, we can affirm the district court on any ground supported by the record. Sec. Life Ins. Co. of Am. v. Meyling, 146 F.3d 1184, 1190 (9th Cir. 1998). There is ample evidence in the record on which to base a finding of bad faith, even though the re-registration of gopets.com did not violate ACPA. In determining whether a defendant has acted in bad faith within the meaning of § 1125(d)(1)(A), a court may consider, but is not limited to, nine factors. The two relevant factors here are: (V) the 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 represented by the mark . . . for commercial gain . . . by creating a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site; . . . (VIII) the person's registration . . . of multiple domain names which the person knows are identical or confusingly similar to marks of others that are distinctive at the time of registration of such domain names[.] 15 U.S.C. § 1125(d)(1)(B)(i). We take these two factors in reverse order. First, it is undisputed that the service mark GoPets was distinctive at the time of registration of [the additional] domain names. The Additional Domains are gopet.mobi, gopets.mobi, gopets.name, gopetssite.com, goingpets.com, gopet.biz, gopet.org, egopets.com, gopetz.bz, gopets.ws, gopet.tv, gopet.ws, gopet.bz, gopet.de, gopet.eu, gopet.name, mygopets.com and igopets.com. The Hises argue that these multiple domain names are not confusingly similar to GoPets. The Hises' argument is implausible on its face. The only relevant evidence the Hises sought to introduce in the district court were identical paragraphs in declarations of Edward and Joseph Hise that stated, without elaboration or support, There are factual issues with respect to the question of whether the . . . domain names listed by plaintiff . . . are confusingly similar to the term gopets. Some of the domain names are definitely not confusingly similar. The district court sustained GoPet Ltd.'s objections to these paragraphs and refused to admit them into evidence. The Hises have not appealed that ruling. Second, it is clear that the Hises intended the Additional Domains to divert consumers from the mark owner's online location to a site accessible under [these] domain name[s] . . . by creating a likelihood of confusion. The district court found that the Hises registered the Additional Domains for commercial gainthat is, that they registered the Additional Domains in order to increase the selling price of gopets.com. The district court believed, incorrectly, that the registration of gopets.com was itself in violation of ACPA. But the legality or illegality of the registration of gopets.com is irrelevant. The question is whether the registration of the Additional Domains was intended to achieve commercial gain by confusing consumers and diverting them from the website they intended to access. It clearly was so intended. ACPA contains a safe harbor defense for registrants who believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful. 15 U.S.C. § 1125(d)(1)(B)(ii). We have cautioned that the safe harbor defense should be invoked very sparingly and only in the most unusual cases. Lahoti v. VeriCheck, Inc., 586 F.3d 1190, 1203 (9th Cir.2009) (internal quotation marks omitted). A defendant who acts even partially in bad faith cannot successfully assert a safe harbor defense. Id. (internal quotation marks omitted). The Hises do not qualify for the safe harbor in their registration of the Additional Domains. The Hises argue that their victory in the WIPO arbitration led them to believe that their registration of the domain name gopets.com was proper. But the WIPO decision gave the Hises no reason to believe they had the right to register additional domain names that were identical or confusingly similar to GoPets. The WIPO arbitrator made clear that the Hises prevailed only because the service mark GoPets had not been registered when Edward Hise registered the domain name gopets.com. The Additional Domains were registered well after GoPets was registered as a service mark. The Hises argue on appeal that GoPets Ltd. acted with unclean hands, and that this should defeat GoPets Ltd.'s claim that the Hises acted in bad faith. The Hises waived that argument by failing to present it to the district court in a timely fashion. See Walsh v. Nev. Dep't of Human Res., 471 F.3d 1033, 1037 (9th Cir.2006). We therefore affirm the district court's holding that the Hises violated ACPA in registering the Additional Domains.

The district court awarded GoPets Ltd. $100,000 for Digital Overture's re-registration of gopets.com, and $1,000 for each of the registrations of the Additional Domains. Because Digital Overture's re-registration of gopets.com did not violate § 1125(d)(1), the award of $100,000 must be set aside. But we affirm the award of $1,000 for each of the Additional Domains. The Hises argue that the Seventh Amendment requires that a jury, rather than the court, determine the amount of damages. We disagree with respect to the damages award for the Additional Domains, the only award now at issue. Go-Pets Ltd. sought damages under the following provision of ACPA: In a case involving a violation of section 1125(d)(1) of this title, the plaintiff may elect, at any time before final judgment is rendered by the trial court, to recover, instead of actual damages and profits, an award of statutory damages in the amount of not less than $1,000 and not more than $100,000 per domain name, as the court considers just. 15 U.S.C. § 1117(d). The Hises rely on Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340, 118 S.Ct. 1279, 140 L.Ed.2d 438 (1998). In Feltner, the Court determined that the copyright statute, 17 U.S.C. § 504(c)(1), did not provide a right to a jury trial on damages. Id. at 347, 118 S.Ct. 1279. The Seventh Amendment, however, guarantees a right to a jury trial for all common-law causes of action, [and] actions brought to enforce statutory rights that are analogous to common-law causes of action ordinarily decided in English law courts in the late 18th century. . . . Id. at 348, 118 S.Ct. 1279 (internal quotation marks omitted). The Court concluded that copyright damages were a common-law cause of action ordinarily tried by juries in the late eighteenth century. Id. at 350, 118 S.Ct. 1279. The Court therefore held that the Seventh Amendment provides a right to a jury trial both as to liability and as to the amount of actual copyright damages, even though the copyright statute does not so provide. Id. at 355, 118 S.Ct. 1279. The language of ACPA's statutory damages provision is essentially identical to the language of the copyright damages provision at issue in Feltner. [1] We conclude, as did the Court in Feltner, that the statute does not provide for a jury trial on damages. The question then becomes whether, and to what degree, the Seventh Amendment requires a jury trial. Cybersquatting, of course, was not a common-law action in English courts in the eighteenth century, but cybersquatting is a form of trademark infringement. It is therefore likely analogous to a common-law cause of action. See Dairy Queen, Inc. v. Wood, 369 U.S. 469, 472-73, 82 S.Ct. 894, 8 L.Ed.2d 44 (1962). We need not decide that question, however, because we hold that there is no right to a jury trial when a judge awards the minimum statutory damages. See BMG Music v. Gonzalez, 430 F.3d 888, 892-93 (7th Cir. 2005) (explaining that there is no right to a jury trial on damages in copyright cases when only the minimum statutory damages are awarded). Under § 1117(d), the minimum damage award, once liability is established under ACPA, is an amount of not less than $1,000. If liability has properly been found on summary judgment, the defendant can gain nothing by going to a jury on the question of damages. The district judge awarded the statutory minimum for the registrations of the Additional Domains. Because the Hises are liable under ACPA as a matter of law for these registrations, the Hises have no right to a jury trial on damages.
The district court ordered that both gopets.com and the Additional Domains be transferred to GoPets Ltd., based on asserted violations of ACPA. Because Digital Overture's re-registration of gopets.com did not violate ACPA, the portion of the district court's order applicable to gopets.com cannot be sustained under ACPA. However, the portion of the district court's order applicable to the Additional Domains is proper under ACPA.