Opinion ID: 199225
Heading Depth: 2
Heading Rank: 1

Heading: Defendants' Bad Faith

Text: 23 Defendants vehemently contest the district court's finding that the registration and maintenance of the northernlights.com domain name represented a bad-faith effort to profit from plaintiff's Northern Light trademark. The issue of bad faith is principally relevant to the merits of plaintiff's suit insofar as bad faith intent to profit from [another's] mark constitutes an essential element of the cause of action under ACPA. 15 U.S.C. § 1125(d)(1)(A)(i). In this case, however, it also relates, albeit tangentially, to plaintiff's trademark-infringement claim. This is so because the district court's finding with respect to defendants' intent in adopting the Northern Lights mark, which the court rendered while considering one of the eight factors under the likelihood-of-confusion test for trademark infringement, see, e.g., I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 43 (1st Cir. 1998), expressly incorporated by reference the intent findings it had made in its ACPA analysis. See 97 F. Supp. 2d at 114. Thus, we must consider the court's bad-faith intent to profit findings to the extent that they bear on the trademark-infringement claim. We review the district court's finding of bad faith for clear error. See American Bd. of Psychiatry & Neurology v. Johnson-Powell, 129 F.3d 1, 3 (1st Cir. 1997) (noting clear-error standard of review applies to findings of fact made in conjunction with ruling on motion for preliminary injunction) (citing Keds Corp. v. Renee Int'l Trading Corp., 888 F.2d 215, 222 (1st Cir. 1989)). 24 On appeal, defendants claim that their conduct did not meet the statutory guidelines for a finding of bad faith, and that even if it did, the subjective and objective reasonableness of their actions should shield them from liability. Defendants stress that their mere registration of multiple domain names does not, by itself, indicate that they were acting in bad faith with regard to any of their individual registrations or website uses. Defendants also assert that the statements of Burgar have been taken out of context by the district court, and have been unfairly used to establish Northern Lights's bad faith. 25 Along with its inclusion of bad faith among the essential elements of the ACPA cause of action, Congress provided nine nonexhaustive guideposts that courts may use to divine whether or not bad faith exists. See 15 U.S.C. §§ 1125(d)(1)(B)(i)(I)-(IX). In addition, the statute provides an escape clause to those whose conduct would otherwise constitute bad faith if the potential infringer believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful. Id. § 1125(d)(1)(B)(ii). In this case, the district court determined that defendants' myriad explanations for their use of the northernlights.com site - e.g., as an experimental new business model, as a site for aurora borealis admirers, and as a compilation of businesses that contain the phrase Northern Lights - undermined Northern Lights's claim of subjective belief in fair use, and hence their entitlement to the escape clause of § 1125(d)(1)(B)(ii). See 97 F. Supp. 2d at 118-19. Additionally, the court concluded that the defendants' numerous registrations of domain names containing the trademarks of others, which defendants accomplished in some cases by creating fictional fan clubs so that they could present a mantle of legitimacy in their registration requests to NSI, represented powerful evidence of defendants' bad faith in operating the northernlights.com site. This conclusion of bad faith was reinforced, according to the district court, by defendants' history of disregarding cease-and-desist letters from legitimate trademark owners, and their apparent openness to sell the northernlight.com registration to the plaintiff at the right price. Id. at 119-20. 26 Based on our review of the record, we see no clear error in the district court's finding that defendants will likely be found to have acted in bad faith in operating the northernlights.com site. 11 Although defendants are correct in asserting that their multiple registrations alone are not dispositive of the bad-faith issue, their well-established pattern of registering multiple domain names containing famoustrademarks, such as rollingstones.com, evinrude.com, and givenchy.com, has been made highly relevant to the determination of bad faith by the list of factors in ACPA. See 15 U.S.C. § 1125(d)(1)(B)(i)(VIII) (noting as relevant factor the person's registration or acquisition 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). Those facts are not clearly trumped by facts favoring defendants' side of the story, such as their use of northernlights.com as an e-mail domain name for several years prior to the dispute with the plaintiff and Burgar's initial resistance to the plaintiff's efforts to acquire defendants' domain-name registration. The district court's finding that defendants were not entitled to the escape clause also is not clearly erroneous; as the court found, defendants' oft-changing explanations for the purpose of the northernlights.com website evince a lack of subjective belief in the domain name's fair use. 27 Based on defendants' apparent modus operandi of registering domain names containing the famous trademarks of others in the hope that the famous trademark holder will be willing to pay to reclaim its intellectual-property rights, the district court reasonably concluded that defendants acted according to script in this case. 12 Accordingly, we determine that the district court did not err in finding that defendants will likely be found to have acted in bad faith in operating their northernlights.com website.