Court Opinion

ID: 1004839
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:47:21.080818+00
Date Added: 2024-06-11T09:08:15.583800
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

DOMAIN NAME CLEARING COMPANY,          
LLC,
              Plaintiff-Appellant,
                 v.                              No. 00-2509

F.C.F. INCORPORATED,
                Defendant-Appellee.
                                       
            Appeal from the United States District Court
         for the Eastern District of Virginia, at Alexandria.
               Claude M. Hilton, Chief District Judge.
                           (CA-00-1305)

                       Argued: June 5, 2001

                      Decided: July 12, 2001

  Before WILKINSON, Chief Judge, NIEMEYER, Circuit Judge,
    and Irene M. KEELEY, Chief United States District Judge
            for the Northern District of West Virginia,
                      sitting by designation.

Affirmed by unpublished per curiam opinion.

                            COUNSEL

ARGUED: Jerry M. Phillips, PHILLIPS, BECKWITH, HALL &
CHASE, Fairfax, Virginia; Chris M. Truax, San Diego, California, for
Appellant. John Foster Anderson, RICHARDS, MCGETTIGAN,
REILLY & WEST, Alexandria, Virginia, for Appellee.
2             DOMAIN NAME CLEARING CO. v. F.C.F. INC.
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                             OPINION

PER CURIAM:

   We must decide here whether the Domain Name Clearing Com-
pany violated the 1999 Anticybersquatting Consumer Protection Act
by registering the domain name Clarins.com. Because the district
court did not err in holding that the company violated the Act, we
affirm.

                                  I.

   On March 16, 1997, Domain Name Clearing Company, LLC
(DNCC) registered the domain name Clarins.com. "Clarins" is a fic-
tional name developed in 1954 by Clarins S.A. to identify a particular
product line. F.C.F. Inc. now holds the license for the Clarins trade-
mark. When F.C.F. discovered that DNCC had registered
Clarins.com, it requested DNCC to transfer the Clarins.com domain
name to F.C.F. F.C.F. received no response. F.C.F. subsequently
offered DNCC $1500 in return for the transfer.

   On March 24, 1998, DNCC filed an action against F.C.F. in Cali-
fornia federal court seeking a declaration that its ownership of the
Clarins.com domain name did not infringe upon F.C.F.’s Clarins
trademark rights. One month later, DNCC sent F.C.F. a letter request-
ing a payment of the amount "it would cost to run a full-page adver-
tisement in one of the high-fashion magazines, such as Cosmopolitan
or Vogue, in which, it appears, your client advertises." F.C.F. refused
to pay this amount, estimated at approximately $60,000.

   After the California district court dismissed DNCC’s action on
jurisdictional grounds and the subsequent appeal to the Ninth Circuit
was dismissed at DNCC’s request, F.C.F. commenced an administra-
tive arbitration proceeding. After a hearing, the panel ordered DNCC
to transfer Clarins.com to F.C.F. on April 5, 2000. On April 21, 2000,
                DOMAIN NAME CLEARING CO. v. F.C.F. INC.                    3
DNCC filed a Bill of Complaint against F.C.F. in Virginia state court.
In the complaint, DNCC challenged the administrative decision and
sought to prevent the transfer of Clarins.com. F.C.F. removed the
action to federal district court on August 1, 2000.1 After removal,
F.C.F. moved for partial summary judgment based on its counterclaim
that the registration of Clarins.com was a violation, inter alia, of the
Anticybersquatting Consumer Protection Act (ACPA). 15 U.S.C.
§ 1125(d). Finding DNCC violated the ACPA, the district court
granted summary judgment to F.C.F. DNCC now appeals.

                                     II.

   The ACPA was enacted in 1999 to combat the practice of cyber-
squatting. See Virtual Works, Inc. v. Volkswagen of America, 238
F.3d 264, 267 (4th Cir. 2001). A violation of the ACPA occurs when
someone "registers, traffics in, or uses a domain name that...is identi-
cal or confusingly similar" to a "famous" or "distinctive" mark and
"has a bad faith intent to profit from that mark." 15 U.S.C.
§ 1125(d)(1)(A). The statute lists nine non-exclusive factors to deter-
mine bad faith.2 The determination of bad faith depends on the facts
  1
    DNCC argues that the federal courts lack subject matter jurisdiction
because the amount in controversy is less than $75,000 as required by 28
U.S.C. § 1332. The district court determined that the domain name
Clarins.com was the object of the litigation and worth more than
$75,000. We find no error in this ruling.
  2
    The nine factors are as follows:
      (B)(i)In determining whether a person has a bad faith intent . . .
      a court may consider factors such as, but not limited to
          (I) the trademark or other intellectual property rights of the
          person, if any, in the domain name;
          (II) the extent to which the domain name consists of the legal
          name of the person or a name that is otherwise commonly
          used to identify that person;
          (III) the person’s prior use, if any, of the domain name in
          connection with the bona fide offering of any goods or ser-
          vices;
          (IV) the person’s bona fide noncommercial or fair use of the
          mark in a site accessible under the domain name;
4             DOMAIN NAME CLEARING CO. v. F.C.F. INC.
and circumstances of each case. See Virtual Works, 238 F.3d at 268;
Sporty’s Farm, L.L.C. v. Sportman’s Market, Inc., 202 F.3d 489, 499
(2d Cir. 2000).

   The Act also contains a safe harbor which states that bad faith
intent "shall not 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 lawful." 15
U.S.C. § 1125(d)(1)(B)(ii). The ACPA provides that, for violations of
the act prior to 1999, the sole remedy is to transfer the domain name
back to its rightful owner. Anticybersquatting Consumer Protection
Act, Pub. L. No. 106-113, § 3010, 113 Stat. 1501A-552 (codified at
15 U.S.C. § 1117 note).

       (V) the person’s intent to divert consumers from the mark
       owner’s online location to a site . . . that could harm the
       goodwill represented by the mark, either for commercial
       gain or with the intent to tarnish or disparage the mark . . .;
       (VI) the person’s offer to transfer, sell, or otherwise assign
       the domain name to the mark owner or any third party for
       financial gain without having used . . . the domain name in
       the bona fide offering of any goods or services . . .;
       (VII) the person’s provision of material and misleading false
       contact information when applying for the registration of the
       domain name . . .;
       (VIII) the person’s registration or acquisition of multiple
       domain names which the person knows are identical or con-
       fusingly similar to marks of others . . .; and
       (IX) the extent to which the mark incorporated in the per-
       son’s domain name registration is or is not distinctive and
       famous . . . .
15 U.S.C. § 1125(d)(1)(B)(i).
              DOMAIN NAME CLEARING CO. v. F.C.F. INC.                   5
                                   III.

                                   A.

   We first inquire whether DNCC acted with bad faith intent when
it registered Clarins.com. There is substantial evidence that it did.
First, DNCC did not own any trademark or intellectual property rights
to the Clarins name; rather F.C.F. owns the Clarins trademark license.
In fact, Clarins was a fictional name created by Clarins S.A. exclu-
sively to identify its cosmetics line. Second, Clarins is not commonly
used to identify DNCC. Nor did DNCC ever develop a website at
Clarins.com or use the Clarins name in connection with the sale of
goods or services. DNCC had nothing whatsoever to do with selling
the Clarins product line. Indeed, there is no evidence that DNCC had
any use planned for Clarins.com. Also DNCC attempted to sell
Clarins.com for "the amount it would cost to run a full-page adver-
tisement in one of the high-fashion magazines." This demand, esti-
mated at $60,000, was reduced to $30,000 in subsequent negotiations.3

   Finally, the evidence demonstrated that DNCC has registered more
than seventy different domain names and has a primary business pur-
pose of registering domain names. For instance, DNCC has registered
belgianchocolate.com, britishmuseum.com, chianti.com, and towerof-
london.com among others. The fact that these domain names may not
have infringed on other trademarks does not make DNCC’s registra-
tion of them irrelevant. In fact, it shows an intent on the part of
DNCC to register a variety of domain names, but not to use them.
This is a key factor in the bad faith determination.

   In response to the evidence demonstrating its bad faith, DNCC
attempts to take refuge in ACPA’s safe harbor. 15 U.S.C.
§ 1125(d)(1)(B)(ii) (providing a safe harbor for persons who reason-
ably believe that "the use of the domain name is a fair use or other-
  3
    DNCC argues that the evidence utilized by the district court to deter-
mine if DNCC attempted to sell the domain name Clarins.com was inad-
missable under Rule 408 of the Federal Rule of Evidence because the
documents were part of settlement negotiations. This evidence speaks
directly to the bad faith determination. And DNCC admitted evidence of
alleged settlement negotiations in the first place. In all events, we find
no abuse of discretion in the admission of the disputed evidence.
6             DOMAIN NAME CLEARING CO. v. F.C.F. INC.
wise lawful"). DNCC relies heavily on the fact that when it registered
Clarins.com and many of the other domain names in 1997, the Inter-
net was in its infancy and Congress had not yet passed the ACPA.
With respect to the Clarins name, DNCC also argues it was not aware
that Clarins was a registered trademark. But it did become aware of
the trademark in 1997 and yet, it subsequently renewed its registration
of Clarins.com. DNCC also did not offer any evidence of why it
selected that name or what it intended to do with Clarins.com or any
of its other domain names. The safe harbor will not be construed "so
broadly as to undermine the rest of the statute." Virtual Works, 238
F.3d at 270. The evidence clearly shows that DNCC made a business
out of registering domain names in order to sell them and "a defen-
dant who acts even partially in bad faith in registering a domain name
is not, as a matter of law, entitled to benefit from the Act’s safe harbor
provision." Virtual Works, 238 F.3d at 270.

   A court may look at the totality of the circumstances in making bad
faith determinations. See 15 U.S.C. § 1125(d)(1)(B)(i); Virtual Works,
238 F.3d at 270. Viewed together, the evidence makes clear DNCC
acted with bad faith when it registered Clarins.com, failed to use it,
and then attempted to sell it for profit to the trademark holder.
DNCC’s actions are just the sort Congress acted to prevent with the
passage of the ACPA.

                                   B.

   The ACPA also requires that the registered name be "identical or
confusingly similar" to a "famous" or "distinctive" mark. 15 U.S.C.
§ 1125(d)(1)(A). The domain name Clarins.com is identical to the
Clarins mark. To determine whether a mark is distinctive and famous,
courts look to the duration and extent of the use of the mark, the
advertising and promotion of the mark, and the degree of public rec-
ognition of the mark. 15 U.S.C. § 1125(c)(1). The Clarins name is fic-
tional and has been used since 1954 to identify a cosmetics line.
Clarins S.A., under the Clarins trademark, has marketed Clarins prod-
ucts in the United States for almost 20 years, spending over $4.5 mil-
lion on advertising and generating over $100 million per year in sales
in this country. F.C.F. obtained a United States Trademark registra-
tion for Clarins in 1990 which was renewed in 2000. The name
Clarins is distinctive and famous as required by the statute.
              DOMAIN NAME CLEARING CO. v. F.C.F. INC.                  7
                                   C.

   DNCC also argues that there was evidence of a prior settlement
agreement in which F.C.F. agreed to pay $30,000 for Clarins.com.
DNCC claims that this makes F.C.F.’s counterclaims irrelevant since
the dispute was settled and the domain name was to be transferred
pursuant to the agreement. However, even viewing the evidence in the
light most favorable to DNCC, there is no evidence of a settlement
agreement signed by all parties. F.C.F., throughout the negotiations,
insisted that any settlement be in writing and signed by all parties. As
the district court noted, "[a]n attached exhibit of a draft of an alleged
settlement agreement signed by the attorney of one party is not evi-
dence of a settlement agreement entered into between the parties."
DNCC simply failed to offer sufficient evidence to create a genuine
factual dispute on this point.

                                  IV.

   The record is replete with evidence that DNCC had a bad faith
intent to profit from another’s mark in violation of the ACPA. The
district court did not err in ordering DNCC to transfer Clarins.com to
F.C.F., and we hereby affirm its judgment.

                                                            AFFIRMED