Court Opinion

ID: 2644849
Source: CourtListenerOpinion
Date Created: 2013-12-04 18:27:58.807695+00
Date Added: 2024-06-11T12:32:22.160832
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

PETROLIAM NASIONAL BERHAD,                 No. 12-15584
(Petronas),
  Plaintiff-counter-claim-defendant –        D.C. No.
                           Appellant,     4:09-cv-05939-
                                               PJH
                 v.

GODADDY.COM, INC.,                           OPINION
     Defendant-counter-claimant –
                        Appellee.

      Appeal from the United States District Court
         for the Northern District of California
      Phyllis J. Hamilton, District Judge, Presiding

                Argued and Submitted
      October 8, 2013—San Francisco, California

                Filed December 4, 2013

    Before: Dorothy W. Nelson, Milan D. Smith, Jr.,
          and Sandra S. Ikuta, Circuit Judges.

          Opinion by Judge Milan D. Smith, Jr.
2                 PETRONAS V. GODADDY.COM

                           SUMMARY*

      Anticybersquatting Consumer Protection Act

   Affirming the district court’s grant of summary judgment
in an action under the Anticybersquatting Consumer
Protection Act, the panel held that the ACPA does not
provide a cause of action for contributory cybersquatting.

    Petroliam Nasional Berhad, a Malaysian oil and gas
company that owned the trademark to the name
“PETRONAS,” alleged that Godaddy.com, Inc., a domain
name registrar, engaged in contributory cybersquatting when
a registrant used GoDaddy’s domain name forwarding service
to direct the domain names “petronastower.net” and
petronastowers.net” to an adult web site hosted on a web
server maintained by a third party.

    The panel held that neither the plain text nor the purpose
of the ACPA provided support for a cause of action for
contributory cybersquatting. It held that the ACPA created a
new and distinct cause of action, and Congress did not
incorporate the common law of trademark, including
contributory infringement, into the ACPA. The panel
therefore affirmed the judgment of the district court.

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
               PETRONAS V. GODADDY.COM                      3

                        COUNSEL

Perry Reed Clark (argued), Palo Alto, California, for
Plaintiff-counter-claim-defendant–Appellant.

John Lawrence Slafsky (argued), David L. Lansky, and Evan
M.W. Stern, Wilson Sonsini Goodrich & Rosati, Palo Alto,
California, for Defendant-counter-claimant–Appellee.

Ian Charles Ballon and Lori Chang, Greenberg Traurig, LLP,
Los Angeles, California, for Amicus Curiae eNom, Inc.

Aaron M. McKown and Paula L. Zecchini, Wrenn Bender
LLP, Irvine, California, for Amici Curiae Network Solutions,
LLC and Register.com, Inc.

                         OPINION

M. SMITH, Circuit Judge:

    In this appeal, Petroliam Nasional Berhad (Petronas)
requests that we read a cause of action for contributory
cybersquatting into the Anticybersquatting Consumer
Protection Act (ACPA or Act), 15 U.S.C. § 1125(d). Because
we conclude that neither the plain text nor the purpose of the
ACPA provide support for such a cause of action, we hold
that there is none. We therefore affirm the judgment of the
district court.

         FACTS AND PRIOR PROCEEDINGS

   Petrolium Nasional Berhad (Petronas) is a major oil and
gas company with its headquarters in Kuala Lumpur,
4               PETRONAS V. GODADDY.COM

Malaysia. Petronas owns the trademark to the name
“PETRONAS.” Godaddy.com, Inc. (GoDaddy) is the
world’s largest domain name registrar, maintaining over 50
million domain names registered by customers around the
world. GoDaddy also provides domain name forwarding
services, which, like its registration service, enables Internet
users who type in a particular domain name to arrive at the
target site specified by GoDaddy’s customer, the registrant.

    In 2003, a third party registered the domain names
“petronastower.net” and “petronastowers.net” through a
registrar other than GoDaddy. In 2007, the owner of those
names transferred its registration service to GoDaddy. The
registrant used GoDaddy’s domain name forwarding service
to direct the disputed domain names to the adult web site,
“camfunchat.com,” which was hosted on a web server
maintained by a third party, and which had been associated
with the disputed domain names, using the previous registrar.

    In late 2009, a Petronas subsidiary responsible for
ferreting out potential trademark infringement contacted
GoDaddy and requested that it “take action against the
website associated with the ‘petronastower.net’ domain
name.” Officials from the Malaysian and U.S. governments
also contacted GoDaddy regarding the domain name.
GoDaddy investigated the issue, but took no action with
respect to the alleged cybersquatting because (1) it did not
host the site; and (2) it was prevented by the Uniform Domain
Name Dispute Resolution Policy (“UDRP”) from
                   PETRONAS V. GODADDY.COM                                5

participating in trademark disputes regarding domain name
ownership.1

    Petronas sued GoDaddy in the United States District
Court for the Northern District of California on a number of
theories, including cybersquatting under 15 U.S.C. § 1125(d),
and contributory cybersquatting. The district court dismissed
all of Petronas’s claims on the pleadings, with leave to
amend. Petronas filed an amended complaint, in which it
continued to allege, inter alia, contributory cybersquatting.
The district court allowed discovery because it “require[d] a
record clarifying the mechanics of what GoDaddy did or does
with regard to the disputed domain names, and what
‘forwarding’ and ‘routing’ are and whether either or both can
be considered part of domain name registration services
generally or the services offered by GoDaddy.” Following
the completion of limited discovery, the district court granted
summary judgment in favor of GoDaddy. Petronas appeals
from the grant of summary judgment only with respect to its
claim of contributory cybersquatting.

   JURISDICTION AND STANDARD OF REVIEW

   We have jurisdiction to review the district court’s grant of
summary judgment under 28 U.S.C. § 1291. We review the

  1
    Registrars are required to comply with the UDRP, which establishes
an expedited and inexpensive arbitration process for resolving
cybersquatting claims. Uniform Domain Name Dispute Resolution
Policy, Internet Corporation for Assigned Names and Numbers,
http://www.icann.org/en/help/dndr/udrp/policy (Last visited Nov. 18,
2013). It also provides that registrars need only intervene in a
cybersquatting dispute upon order of a court or an arbitration decision. Id.
The purpose of the UDRP procedure is to remove registrars from
participation in domain name disputes.
6                 PETRONAS V. GODADDY.COM

district court’s order de novo, In re Ilko, 651 F.3d 1049, 1052
(9th Cir. 2011), and may affirm on any ground supported in
the record. Sams v. Yahoo! Inc., 713 F.3d 1175, 1179 (9th
Cir. 2013) (citing Islamic Republic of Iran v. Boeing Co.,
771 F.2d 1279, 1288 (9th Cir. 1985)).

                          DISCUSSION

    The Lanham Act, 15 U.S.C. § 1051 et seq., passed in
1946, codified the then existing common law of trademarks,
which in turn was based on the tort of unfair competition.
See Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 428
(2003) (“Traditional trademark infringement law is a part of
the broader law of unfair competition that has its sources in
English common law, and was largely codified in the
Trademark Act of 1946 (Lanham Act).” (internal citations
omitted)). Due primarily to the common law origins of
trademark infringement, courts have concluded that the
Lanham Act created a cause of action for secondary liability.
See, e.g., Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844,
854 (1982) (“[I]f a manufacturer or distributor intentionally
induces another to infringe a trademark, or if it continues to
supply its product to one whom it knows or has reason to
know is engaging in trademark infringement, the
manufacturer or distributor is contributorially responsible for
any harm done as a result of the deceit.”).2

    2
   The Supreme Court cites to William R. Warner & Co. v. Eli Lilly &
Co., 265 U.S. 526 (1924), a pre-Lanham Act decision recognizing
contributory liability for unfair trade practices, and Coca-Cola Co. v.
Snow Crest Beverages, Inc., 64 F. Supp. 980, 989 (D. Mass. 1946), aff’d,
162 F.2d 280 (1st Cir. 1947), which held that trademark law under the
Lanham Act retained the character of pre-Lanham Act unfair competition
law, in support of this proposition.
                 PETRONAS V. GODADDY.COM                            7

    In 1999, Congress passed the ACPA, which amended the
Lanham Act by adding two new causes of action aimed at
cybersquatting.3 Consolidated Appropriations Act, 2000,
Pub. L. No. 106-113, Div. B, § 1000(a)(9), 113 Stat. 1536,
1501A-545. Under the ACPA, a person may be civilly liable
“if . . . that person has a bad faith intent to profit from that
mark . . . and registers, traffics in, or uses a [protected]
domain name.” 15 U.S.C. § 1125(d)(1)(A). Congress also
created an in rem action to facilitate recovery of domain
names by their rightful owners. 15 U.S.C. § 1125(d)(2)(A).
Petronas contends that the ACPA also provides a cause of
action for contributory cybersquatting because Congress
intended to incorporate common law principles of secondary
liability into the Act by legislating against the backdrop of the
common law of trademark infringement, and by placing the
ACPA within the Lanham Act. We disagree.

    Our first obligation in determining whether the ACPA
includes a contributory cybersquatting claim is to examine
the plain text of the statute. See Hawaii v. Office of Hawaiian
Affairs, 556 U.S. 163, 173 (2009). Established common law
principles can be inferred into a cause of action where
circumstances suggest that Congress intended those principles
to apply. Compare, e.g., Meyer v. Holley, 537 U.S. 280, 285
(2003) (“[W]hen Congress creates a tort action, it legislates
against the legal background of ordinary tort-related vicarious
liability rules and consequently intends its legislation to
incorporate those rules.”) with Cent. Bank of Denver, N.A. v.

   3
     Cybersquatting can be understood as registering a domain name
associated with a protected trademark either to ransom the domain name
to the mark holder or to divert business from the mark holder. Bosley
Med. Inst., Inc. v. Kremer, 403 F.3d 672, 680 (9th Cir. 2005) (quoting
DaimlerChrysler v. The Net Inc., 388 F.3d 201, 204 (6th Cir. 2004)).
8              PETRONAS V. GODADDY.COM

First Interstate Bank of Denver, N.A., 511 U.S. 164, 182
(1994) (“[W]hen Congress enacts a statute under which a
person may sue and recover damages from a private
defendant for the defendant’s violation of some statutory
norm, there is no general presumption that the plaintiff may
also sue aiders and abettors.”).

    We hold that the ACPA does not include a cause of action
for contributory cybersquatting because: (1) the text of the
Act does not apply to the conduct that would be actionable
under such a theory; (2) Congress did not intend to implicitly
include common law doctrines applicable to trademark
infringement because the ACPA created a new cause of
action that is distinct from traditional trademark remedies;
and (3) allowing suits against registrars for contributory
cybersquatting would not advance the goals of the statute.

I. The Plain Text of the ACPA Does Not Provide a Cause
   of Action for Contributory Cybersquatting

    “The preeminent canon of statutory interpretation requires
us to ‘presume that [the] legislature says in a statute what it
means and means in a statute what it says there.’” BedRoc
Ltd., LLC v. United States, 541 U.S. 176, 183 (2004) (quoting
Conn. Nat’l Bank v. Germain, 503 U.S. 249, 253–254
(1992)). We thus begin our analysis with the text of the
ACPA.

    The ACPA imposes civil liability for cybersquatting on
persons that “register[], traffic[] in, or use[] a domain name”
with the “bad faith intent to profit” from that protected mark.
15 U.S.C. § 1125(d)(1)(A). The plain language of the statute
thus prohibits the act of cybersquatting, but limits when a
person can be considered to be a cybersquatter. Id. The
                PETRONAS V. GODADDY.COM                       9

statute makes no express provision for secondary liability. Id.
Extending liability to registrars or other third parties who are
not cybersquatters, but whose actions may have the effect of
aiding such cybersquatting, would expand the range of
conduct prohibited by the statute from a bad faith intent to
cybersquat on a trademark to the mere maintenance of a
domain name by a registrar, with or without a bad faith intent
to profit. This cuts against finding a cause of action for
contributory cybersquatting. See Cent. Bank, 511 U.S. at
177–178 (“We cannot amend the statute to create liability for
acts that are not themselves [prohibited] within the meaning
of the statute.”).

    Furthermore, “Congress knew how to impose [secondary]
liability when it chose to do so.” Id. at 176. Congress chose
not to impose secondary liability under the ACPA, despite the
fact that the availability of such remedies under traditional
trademark liability should have increased the salience of that
issue. See Pub. L. No. 106-113; Ives, 456 U.S. at 854.

    Petronas argues that the liability limiting language in
Section 1114(2)(D)(iii) indicates that Congress intended
15 U.S.C. § 1125(d)(1)(A) to create a cause of action for
secondary liability. Section 1114(2)(D)(iii) provides that “[a]
domain name registrar, a domain name registry, or other
domain name registration authority shall not be liable for
damages under this section for the registration or
maintenance of a domain name for another absent a showing
of bad faith intent to profit from such registration or
maintenance of the domain name.” By its terms, Section
1114(2)(D)(iii), applies only to “this section,” meaning
Section 1114. Section 1114, in turn, sets out remedies for the
entire Lanham Act, including actions brought under Section
1125(a), which indisputably includes a cause of action for
10             PETRONAS V. GODADDY.COM

contributory infringement. Ives, 456 U.S. at 854. Thus, the
limitations on secondary liability in Section 1114 are equally
consistent with the existence or absence of a cause of action
for contributory cybersquatting under Section 1125(d). See,
e.g., Lockheed Martin Corp. v. Network Solutions, Inc.,
141 F. Supp. 2d 648, 655 (N.D. Tex. 2001).

    Furthermore, the legislative history of the ACPA
establishes that Section 1114(2)(D)(iii) was intended to
codify the protection that we granted registrars in Lockheed
Martin Corp. v. Network Solutions, Inc., 194 F.3d 980,
984–985 (9th Cir. 1999), which considered secondary
liability of registrars for trademark infringement under
15 U.S.C. § 1125(a). S. Rep. 106-140 at 11 (“The bill, as
amended, also promotes the continued ease and efficiency
users of the current registration system enjoy by codifying
current case law limiting the secondary liability of domain
name registrars and registries for the act of registration of a
domain name.” (citing, inter alia, Lockheed, 141 F.3d at
1319)). Section 1114(2)(D)(iii) thus does not suggest that
Congress intended to include a cause of action for
contributory cybersquatting in Section 1125(d).

II. The ACPA Created a New and Distinct Cause of
    Action

    Petronas next argues that Congress incorporated the
common law of trademark, including contributory
infringement, into the ACPA. Petronas observes that a
number of district courts have relied on this reasoning in
finding a cause of action for contributory cybersquatting. See
Verizon Cal., Inc. v. Above.com Pty Ltd., 881 F. Supp. 2d
1173, 1176–79 (C.D. Cal. 2011); Microsoft Corp. v. Shah,
No. 10-0653, 2011 WL 108954, at *1–3 (W.D. Wash. Jan.
               PETRONAS V. GODADDY.COM                     11

12, 2011); Solid Host, NL v. Namecheap, Inc., 652 F. Supp.
2d 1092, 1111–12 (C.D. Cal. 2009); Ford Motor Co. v.
Greatdomains.com, Inc., 177 F. Supp. 2d 635, 646–47 (E.D.
Mich. 2001). We are not persuaded by such reasoning.

    “[W]hen Congress enacts a statute under which a person
may sue and recover damages from a private defendant for
the defendant’s violation of some statutory norm, there is no
general presumption that the plaintiff may also sue aiders and
abettors.” Bank of Denver, 511 U.S. at 182. Contributory
liability has, however, been applied to trademark
infringement under the Lanham Act. See Ives, 456 U.S. at
854. Petronas argues that by legislating against this
background, and by placing the ACPA within the Lanham
Act, Congress intended to include within the ACPA a cause
of action for contributory cybersquatting. See United States
v. Texas, 507 U.S. 529, 534 (1993) (“[s]tatutes which invade
the common law . . . are to be read with a presumption
favoring the retention of long-established and familiar
principles, except when a statutory purpose to the contrary is
evident.” (citations omitted)). We disagree.

    Although there is no general presumption of secondary
liability, Bank of Denver, 511 U.S. at 182, courts can infer
such a cause of action where circumstances suggest that
Congress intended to incorporate common law principles into
a statute. The circumstances surrounding the passage of the
Lanham Act support such an inference, as has been
recognized by the Supreme Court. See Ives, 456 U.S. at 854.
The circumstances surrounding the enactment of the ACPA,
however, do not support the inference that Congress intended
to incorporate theories of secondary liability into that Act.
Accordingly, we conclude that the ACPA did not incorporate
principles of secondary liability.
12             PETRONAS V. GODADDY.COM

    Prior to the enactment of the Lanham Act, the Supreme
Court incorporated a common law theory of contributory
liability into the law of trademarks and unfair competition.
See William R. Warner & Co., 265 U.S. at 530–31. The
Lanham Act then codified the existing common law of
trademarks. See Moseley, 537 U.S. at 428 (“Traditional
trademark infringement law is a part of the broader law of
unfair competition that has its sources in English common
law, and was largely codified in the Trademark Act of 1946
(Lanham Act).” (internal citations omitted)); see also
Kenneth L. Port, The Illegitimacy of Trademark
Incontestability, 26 Ind. L. Rev. 519, 520 (1993) (“[T]he
Lanham Act’s primary, express purpose was to codify the
existing common law of trademarks and not to create any new
trademark rights.”). In light of the Lanham Act’s codification
of common law principles, including contributory liability,
the Supreme Court concluded that a plaintiff could recover
under the Act for contributory infringement of a trademark.
See Ives, 456 U.S. at 854.

    By contrast, the ACPA did not result from the
codification of common law, much less common law that
included a cause of action for secondary liability. Rather, the
ACPA created a new statutory cause of action to address a
new problem: cybersquatting. S. Rep. 106-140 at 7 (noting
that “[c]urrent law does not expressly prohibit the act of
cybersquatting”).

    Consistent with their distinct purposes, claims under
traditional trademark law and the ACPA have distinct
elements. Traditional trademark law only restricts the
commercial use of another’s protected mark in order to avoid
consumer confusion as to the source of a particular product.
New Kids on the Block v. News Am. Pub., Inc., 971 F.2d 302,
                PETRONAS V. GODADDY.COM                      13

305–06 (9th Cir. 1992); Bosley, 403 F.3d at 680.
Cybersquatting liability, however, does not require
commercial use of a domain name involving a protected
mark. Bosley, 403 F.3d at 681. Moreover, to succeed on a
claim for cybersquatting, a mark holder must prove “bad
faith” under a statutory nine factor test. 15 U.S.C.
§ 1125(d)(1)(B). No analogous requirement exists for
traditional trademark claims. Lahoti v. VeriCheck, Inc.,
586 F.3d 1190, 1202 (9th Cir. 2009) (citing Interstellar
Starship Servs., Ltd. v. Epix, Inc., 304 F.3d 936, 946 (9th Cir.
2002)).

    These differences highlight the fact that the rights created
in the ACPA are distinct from the rights contained in other
sections of the Lanham Act, and do not stem from the
common law of trademarks. Accordingly we decline to infer
the existence of secondary liability into the ACPA based on
common law principles. Cf. MDY Indus., LLC v. Blizzard
Entm’t, Inc., 629 F.3d 928, 948 n.10 (9th Cir. 2011) (noting
that new rights of action established by the Digital
Millennium Copyright Act may not be subject to the same
defenses available to traditional copyright claims).

III.   Finding a Cause of Action for Contributory
       Cybersquatting would not Further the Goals of the
       Statute

    Congress enacted the ACPA in 1999 in order to “protect
consumers . . . and to provide clarity in the law for trademark
owners by prohibiting the bad-faith and abusive registration
of distinctive marks . . . .” S. Rep. No. 106-140 at 4. The
ACPA is a “carefully and narrowly tailored” attempt to fix
this specific problem. Id. at 12–13. To this end, the statute
imposes a number of limitations on who can be liable for
14              PETRONAS V. GODADDY.COM

cybersquatting and in what circumstances, including a bad
faith requirement, and a narrow definition of who “uses” a
domain name. 15 U.S.C. §§ 1125(d)(1)(A)(i), 1125(d)(1)(B),
1125(d)(1)(D). Imposing secondary liability on domain name
registrars would expand the scope of the Act and seriously
undermine both these limiting provisions.

    Recognizing this risk, some of the district courts that have
recognized a cause of action for contributory liability have
required that a plaintiff show “exceptional circumstances” in
order to hold a registrar liable under that theory. See
Above.com Pty Ltd., 881 F. Supp. 2d at 1178; Shah, 2011 WL
108954, at *2; Greatdomains.com, Inc., 177 F. Supp. 2d at
647. This “exceptional circumstances” test has no basis in
either the Act, or in the common law of trademark. Rather
than attempt to cabin a judicially discovered cause of action
for contributory cybersquatting with a limitation created out
of whole cloth, we simply decline to recognize such a cause
of action in the first place.

    Limiting claims under the Act to direct liability is also
consistent with the ACPA’s goal of ensuring that trademark
holders can acquire and use domain names without having to
pay ransom money to cybersquatters. Because direct
cybersquatting requires subjective bad faith, focusing on
direct liability also spares neutral third party service providers
from having to divine the intent of their customers. In order
for a service provider like GoDaddy, with clients holding
over 50 million domain names, to avoid contributory liability,
it would presumably have to analyze its customer’s subjective
intent with respect to each domain name, using the nine factor
statutory test. 15 U.S.C. § 1125(d)(1)(B). Despite that nearly
impossible task, service providers would then be forced to
inject themselves into trademark and domain name disputes.
               PETRONAS V. GODADDY.COM                     15

Moreover, imposing contributory liability for cybersquatting
would incentivize “false positives,” in which the lawful use
of a domain name is restricted by a risk-averse third party
service provider that receives a seemingly valid take-down
request from a trademark holder. Entities might then be able
to assert effective control over domain names even when they
could not successfully bring an ACPA action in court.

     When actionable cybersquatting occurs, mark holders
have sufficient remedies under the ACPA without turning to
contributory liability. In addition to the provisions imposing
civil liability on cybersquatters, 15 U.S.C. § 1125(d)(1)(A),
the ACPA authorizes an in rem action against a domain name
if the registrant is not available to be sued personally.
15 U.S.C. § 1125(d)(2)(A). Finally, trademark holders may
still bring claims for traditional direct or contributory
trademark infringement that arises from cybersquatting
activities. 15 U.S.C. § 1125(d)(3).

                      CONCLUSION

    We hold that there is no cause of action for contributory
cybersquatting under the ACPA, and affirm the judgement of
the district court.

   AFFIRMED