Opinion ID: 803235
Heading Depth: 4
Heading Rank: 2

Heading: The ACPA and “Bad Faith”

Text: A plaintiff pursuing a cybersquatting claim under the ACPA must show that: “(1) the defendant registered, trafficked in, or used a domain name; (2) the domain name is identical or confusingly similar to a protected mark owned by the plaintiff; and (3) the defendant acted ‘with bad faith intent to profit from that mark.’ ” DSPT Int’l, Inc. v. Nahum, 624 F.3d 1213, 1218-19 (9th Cir. 2010) (footnote omitted). This appeal implicates the first and third elements of the ACPA cause of action for cybersquatting: whether the plaintiff possesses a protected mark; and whether the defendant acted with a bad faith intent to profit. See, e.g., 15 U.S.C. § 1125(d)(1)(A); DSPT, 624 F.3d at 1218-19. We have already determined (in Section III.A.1.a, supra) that there are genuine issues of material fact with respect to the Appellants’ “use in commerce” of the “Rearden” marks and names. The District Court recognized that a reasonable jury could, however, find that Appellants used in commerce the “Rearden Studios” mark as of this date, and it therefore REARDEN LLC v. REARDEN COMMERCE, INC. 7649 refused to grant summary judgment in Rearden Commerce’s favor based on the “use in commerce” requirement with respect to the domain names registered after July 2005 (“ReardenLLC.com,” “ReardenLLC.net,” “ReardenMobile.com,” “MobileRearden.com,” and possibly “ReardenC.com”). Appellants themselves focus on these post-July 2005 domain names—especially “ReardenLLC.com” and “ReardenLLC.net.” As to bad faith, the notion implicates three analyses: (1) surveying the nine non-exclusive and permissive statutory factors that “may” be considered in “determining whether a person has a bad faith intent,” 15 U.S.C. § 1125(d)(1)(B)(i); (2) taking into account the unique circumstances of each case, which represent “ ‘the most important grounds for finding bad faith,’ ” and which affect the examination (and weight) of the nine permissive factors as well as any other relevant considerations, Lahoti v. VeriCheck, Inc., 586 F.3d 1190, 1202 (9th Cir. 2009) (quoting Interstellar Starship Servs., Ltd. v. Epix, Inc. 304 F.3d 936, 946 (9th Cir. 2002)); and (3) considering the availability of the safe harbor for any defendant 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). Applying this framework, we determine that there are genuine issues of material fact with respect to the matter of bad faith. Beginning with the statutory factors, the District Court recognized that the second factor (the extent to which the domain name consists of the alleged cybersquatter’s legal name or a name commonly used to identify the cybersquatter) “marginally favors” Appellants, at least as to the “ReardenLLC” domain names, because Rearden Commerce admitted that it has never used the term “Rearden LLC” to describe itself. Rearden II, 2010 WL 2650516, at . We add that a reasonable jury could weigh this particular factor even more heavily in favor of Appellants given the fact that “Rearden LLC” is 7650 REARDEN LLC v. REARDEN COMMERCE, INC. the exact legal name recently adopted by one of the Appellants. Furthermore, Rearden Commerce’s own General Counsel “ordered these domains be purchased immediately after learning that Rearden might oppose RC’s trademark applications.” Id. at . Specifically, General Counsel Sandoval and Appellants’ outside counsel had been exchanging e-mails—all with the subject line “Rearden LLC”—about, among other things, Appellants’ possible opposition to Rearden Commerce’s trademark applications. At the same time, Grady had asked Perlman whether the “Rearden.com” domain name was for sale and had received a negative response. On the same day it agreed to an extension of time for Appellants to oppose its trademark applications, Rearden Commerce, at Sandoval’s own direction, registered the “ReardenLLC.com” domain name (and the company obtained the “ReardenLLC.net” name shortly thereafter). Explaining this conduct, Sandoval testified, inter alia, that: “So, yes, at that point in time, there was I find out that there’s a party opposing my trademark application that I feel has no right to oppose my trademark application, and I need to protect my mark, and I need to—and those were two marks that I hadn’t obtained in the past.” (ER310ER311 (emphasis added).) He also admitted that he was well aware of the fact that one of the Perlman entities was organized as a limited liability company. [22] The District Court (and Rearden Commerce) are correct that a reasonable jury could find that Rearden Commerce had not earlier considered these two particular domain names during its initial registration frenzy, registered them when it became aware of the names, and did so as part of a longstanding (if unwritten and informal) branding program. However, it is improper for a court to grant a party’s summary judgment motion merely because the finder of fact could find in its favor. On the contrary, a reasonable finder of fact could, among other things, find that Rearden Commerce acted in bad faith by seeking to gain leverage in an ongoing trademark disREARDEN LLC v. REARDEN COMMERCE, INC. 7651 pute, especially given the apparent absence of any formal policy or method for its registrations. See, e.g., DSPT, 624 F.3d at 1218-21 (stating that registration or use of domain name in order to obtain leverage in business dispute could be sufficient to establish bad faith). [23] Likewise, there are genuine issues of material fact with respect to Rearden Commerce’s alleged good or bad faith in dealing with Appellants after they first accused the company of cybersquatting. As Appellants acknowledge, Rearden Commerce did deactivate the “ReardenLLC.com” and “ReardenLLC.net” domain names when confronted by Appellants. At oral argument on the cybersquatting claims, Rearden Commerce (although, as Appellants point out, at the District Court’s prompting) made an unconditional offer to transfer the two domain names to Appellants. However, we disagree that such conduct “conclusively demonstrates,” Rearden II 2010 WL 2650516, at , Rearden Commerce’s good faith. Given the overall factual record present in this case, this is a question for the jury to decide. We note, for example, that Rearden Commerce had previously offered to maintain the non-directing nature of the domain names only on the condition that Appellants abandon several trademark applications. The District Court did draw a distinction between attempting to sell a domain name before litigation commences and doing so in the context of litigation itself. But, at the very least, the evidence in the record still presents genuine factual issues with respect to the existence of bad— or good—faith. See, e.g., DSPT, 624 F.3d at 1218-21.