The Uniform Domain Name Dispute Resolution Policy (UDRP) is not an exclusive remedy for cybersquatting, but it is by far the preferred forum. Direct actions in courts of competent jurisdiction, the Anticybersquatting Consumer Protection Act (ACPA) in the U.S. are minimal in comparison, and it is rare for respondents to remove disputes to a court of competent jurisdiction before a UDRP decision (paragraph 4(k) of the Policy). Less rare (but not copious) are post-UDRP challenges under the ACPA. I mentioned in a recent essay there are several post-UDRP actions currently pending on U.S. district court dockets for relief under the ACPA. See also discussion of earlier cases in Statutory Remedies for UDRP Grievants. When cases go the distance in federal court, it’s a rare opportunity to get some feedback from the Bench on issues of bad faith and lawful registrations of domain names—Bench, because these disputes are typically resolved on summary judgment, or bench trial.

Direct complaints to federal court are generally filed for speed in obtaining preliminary injunctions (for fraudulent transfers, for example, or shutting down multiple websites offering counterfeit goods). A case currently in the news is Lemond v. Stinchfield, Civil No. 17?2071 (D. Minn., August 14, 2017) in which the court granted a preliminary injunction ordering removal of all content from websites, directing defendant to cease using the (33) domain names, selling or assigning the domain names, and enjoining further registrations incorporating plaintiff’s mark). Where these direct-ACPA disputes involve legal issues outside the scope of the UDRP, they are not suitable for summary adjudication.

However, for post-UDRP challenges, there have been a number of decisions that have reinforced principles developed under UDRP jurisprudence and some particular to trademark law. The challenges have come from top and bottom of the caption. These challenges and those pending are not appeals but de novo reviews of the facts. Parties should be prepared for a totally different experience in ACPA actions (a warning particularly to respondents who are less likely to be represented by counsel but also to mark owners as a caution against overreaching rights that the losing party is exposed to statutory damages “not more than $100,000,” 15 U.S.C. §1117(d) and (e)) and attorney’s fees, §1114(2)(D)(iv). Investor, losing party in an important decision affirmed by the 9th Circuit paid a heavy price for challenging the UDRP decision, Lahoti v. VeriCheck, Inc., 586 F.3d 1190 (9th Cir. 2009) and 636 F.3d 501 (9th Cir. 2011).

Two recent cases are worth noting (both decided in favor of mark owners, one as plaintiff and the other as defendant), Bulbs 4 E. Side, Inc. v. Ricks, (S.D. Tex., Houston Div. July 18, 2017 (Complainant as grievant from Bulbs 4 East Side Inc., d/b/a Just Bulbs v. Fundacion Private Whois/ Gregory Ricks, D2013?1779 (WIPO January 13, 2014)); Direct Niche, LLC v. Via Varejo S/A, 15?cv?62344 (S.D. Fla., August 10, 2017) (Respondent as grievant from VIA VAREJO S/A, v. Domain Admin, D2015?1304 (WIPO October 17, 2015) (<casasbahia.com>)).

A third dispute recently ended with a Consent Judgment (ostensibly in favor of domain name investor); but the Judgment doesn’t tell us very much so I’ll simply identify it: VIRTUALPOINT, INC., dba Captive Media, v. POARCH BAND OF CREEK INDIANS, dba PCI GAMING AUTHORITY, SACV-15-02025 (DCCD, CA July 10, 2017), “The Decision in the underlying UDRP before the NAF [now known as The Forum] ordering Plaintiff VPI to transfer ownership of the Domain Name to PBCI is reversed on the grounds that VPI has rights or legitimate interests in the Domain Name, registered and used the Domain in good faith, and is the rightful owner of the Domain Name. It is therefore Ordered that the [UDRP] decision be withdrawn in full (Poarch Band of Creek Indians dba PCI Gaming Authority v. Tech Admin, Virtual Point, FA1509001639763 (Forum November 13, 2015) (<wind creek.com>)).

The Ricks dispute actually began in 2003 with Superiority, Inc. d/b/a Just Bulbs v. none/Mother boards.com, D2003?0491 (WIPO October 9, 2003) for <justbulbs.com> but for a combination of reasons the Panel dismissed the complaint: “the phrase is a relatively short (only two words) and simple (comprised of common English words) descriptive phrase that could be used equally well to indicate flower bulbs or light bulbs.” Further (and resulting in a finding that there was no bad faith registration, albeit transient bad faith use):

Since Respondent has represented it will not resume advertising light bulbs, Respondent’s use of the domain name as a portal for customers interested in flower bulbs is sufficient to demonstrate a legitimate interest and a bona fide use of the domain name.

The dispute returned to the UDRP in 2013 because representations notwithstanding Ricks resumed advertising light bulbs, but now Complainant was faced with having to surmount two different arguments, namely res judicata (Ricks was the principal of the earlier Respondent) and more potently that proof of bad faith use subsequent to lawful registration is not sufficient to prove abusive registration under UDRP jurisprudence. The Panel accepted Respondent’s argument and denied the complaint with the following explanation (in keeping with the consensus among Panelists that subsequent bad faith use after lawful registration is not actionable):

There is no new evidence in the record of the present case that Respondent=s state of knowledge of Complainant’s mark back in 2003 was different from how the Superiority panel considered it. In other words, there is no more reason now than there was in 2003 to conclude that Respondent registered the Domain Name in bad faith. (The fact that, since 2003, Respondent has emerged as a serial cybersquatter does not, in this Panel’s view, upset the conclusion under the particular circumstances of this case that Respondent’s initial registration of the Domain Name—the second?level domain of which [“just bulbs”] is a fairly descriptive term—was not in bad faith.)

In contrast, the ACPA provides a different route for determining abusive registration. For one, the ACPA is a disjunctive model as opposed to the UDRP which requires proof of conjunctive bad faith. Mark owners can succeed in an ACPA action by proving bad faith use (assuming the mark was distinctive before the registration of the domain name, which was the case in Bulbs). Proof of bad faith use alone is sufficient to establish abusive registration. There were also other implicating factors:

In this case, the Court finds that Plaintiff has conclusively demonstrated that Defendant acted in bad faith under the ACPA. An overwhelming majority of the factors suggest bad faith, and the Court is particularly convinced that Defendant’s egregious pattern of cybersquatting shows bad faith. The prior WIPO decisions are also relevant to the “totality of the circumstances,” because they clearly demonstrate that Defendant knew or should have known that his conduct was illegal, but continued to use his website to advertise lightbulbs.

In a Final Judgment entered August 3, 2017 the Court awarded plaintiff mark owner $50,000 statutory damages and $73,834.10 attorney’s fees.

In Direct Niche the court is yet to rule on damages and attorney’s fees, but its ruling on the summary judgment motion leaves little doubt it will be forthcoming against defendant domain name holder. The UDRP Panel

was able to personally assess that the Respondent uses the disputed domain name to direct Internet users to a website which contains a pay per click (PPC) website. The Internet user is automatically redirected to a webpage where you find several categories of sponsored links. When clicking on any subcategory the Internet user faces a list of sponsored links of products and services which compete with the Complainant’s goods sold on the Complainant’s website and retail stores.

The district court judge looked even further into the circumstances, questioning plaintiff’s (formerly Respondent’s credibility) at bench trial, the court simply didn’t believe plaintiff’s narrative):

[Pg 6] Despite this marked increase in price [over the singular version of the phrase for the domain name], [Plaintiff, previously Respondent in the UDRP proceeding] did not perform any trademark or Google searches for the plural casas bahia, instead choosing to rely on his recollection of the searches he had performed for the singular casa bahia three years earlier.

And

[Pg 16] Direct Niche fails to plausibly explain why it publicly listed its name and St. Louis Park, Minnesota, address as the registrant name and address for its other domains, yet hid its identity behind two layers of privacy protection when the time came to register the Casas Bahia DomainCthat is, until this lawsuit was filed, at which time it changed the registrant to its own name and address.

Earlier cases in which district courts had personal jurisdiction, the courts awarded damages and attorney’s fees to prevailing parties. Other cases in the pipeline include Corporacion Empresarial Altra S.L. v. Development Services, Telepathy, Inc., D2017-0178 (WIPO May 15, 2017) (<airzone.com>. Complainant sanctioned for RDNH; Respondent has commenced an ACPA (as the prevailing party). It presents a first-time issue, namely whether a losing complainant who is sanctioned for reverse domain name hijacking is also exposed to monetary damages under the ACPA for up to $100,000; it could open a flood-gate if the answer is “yes.”