Bosh v. Zavala: Was the Court's Order that a Cybersquatter to Turn Over 700 Domain Names that Incorporated Names of Non-appearing Parties to a Plaintiff Proper?
In a recent ruling, a judge in the Central District of California ordered a defendant in a cybersquatting case to turn over hundreds of domain names that incorporated the names of professional athletes to the plaintiff, Toronto Raptors power forward Christopher Bosh. As the result of the order, Bosh is now the owner of domain names such as mikedunleavy.com, deronwilliams.com, krishumphries.com, amarestoudemire.com, shaunlivingston.com and daleearnhardtjr38.com. See Bosh v. Zavala, C.D. Cal. No. 2:08-cv-04851, Amended Order (Sept. 29, 2009). While some might laud the Court's intentions, the order violates both the Federal Rules of Civil Procedure and California law. It also creates as many problems as it solves.
This case began in July 2008 when Bosh filed a cybersquatting suit against Zavala, whom he alleged to be operating a domain name parking scheme. According to the complaint, Zavala had registered over 778 domain names that incorporated the names of famous basketball players such as Steve Nash of the Phoenix Suns, Shawn Marion of the Miami Heat, Cedric Bozeman of the Atlanta Hawks, Sam Cassell of the Boston Celtics, celebrities such as Scarlett Johanson and business names such as World Cup and Century 21. Bosh alleged that Zavala used a third party "parking service" to post websites at these domain names that included the athlete's names and advertising hyperlinks. When Internet users searched for the athletes' names, they would arrive at Zavala's Internet sites, click on the advertising, thus generating revenue for Zavala.
Bosh specifically sued Zavala for his alleged creation of a site with the name chrisbosh.com. The complaint included a claims under the Anticyberquatting Consumer Protection Act (ACPA) (15 U.S.C. § 1125(b)) and the California Right of Publicity Act (Cal. Civ. Code § 3344). Bosh's complaint was brought solely on behalf of himself, and did not join as plaintiffs any of the other persons whose names Zavala had allegedly co-opted for his website. See Bosh v. Zavala, C.D. Cal., No. 2:08-cv-04851, Complaint (July 24, 2008).
Zavala did not answer the complaint and the judge eventually entered a default judgment against him. The ACPA provides a list of remedies that a judge may impose against a defendant in a cyber-squatting case, including "the forfeiture or cancellation of the domain name or the transfer of the domain name to the owner of the mark." 15 U.S.C. § 1125(d)(1)(C). Accordingly, as part of the default judgment, the judge ordered that the chrisbosh.com domain name to be transferred to the plaintiff, Chris Bosh. See Bosh v. Zavala, C.D. Cal., No. 2:08-cv-04851, Amended Order Granting Default (April 7, 2009). The judgment also included a statutory damages award of $100,000. So far, so good.
However, in September 2009, the Plaintiff then took matters a step further, and requested that the judge issue a different kind of turnover order. This time Bosh asked the Court to order Zavala to turn over all 778 domain names that Zavala controlled directly to Bosh. Bosh claimed that the judge had the authority to issue this order because California Code of Civil Procedure Section 699.040 states that a court may order personal property of a judgment debtor to be turned over to "the levying officer" for sale to satisfy his debts.
However, Bosh argued that it didn't make sense to transfer the domain names to a levying officer for sale, because the domain names incorporated the names of third party athletes, and auctioning off the domain names could result in the purchase of the domain names by third parties" who would also engage in cybersquatting. Bosh further argued that it didn't make sense to transfer the domain names to the U.S. Marshall Service because it would "present a significant technical burden" to the Service and the Service would be required to pay renewal and maintenance fees for the names, or the domain name registrars would let them lapse.
Instead, Bosh asked the Court to transfer the domain names to himself. He promised that he would then "make reasonable efforts to contact the rightful owners of the domain names and transfer the domain names to those individuals and companies." He also said that we would offer the services of his web development company, Max Deal Technologies "to manage the domain name and create a website for the person or company." According to Bosh, the opportunity to offer the services of his company Max Deal Technologies constituted his "only realistic prospect . . . to collect on the Judgment." Bosh v. Zavala, C.D. Cal., No. 2:08-cv-04851, Ex Parte Application for Turnover Order (September 15, 2009).
Since there was no opposition (Zavala defaulted), the judge granted Bosh's request. On September 24, 2009, she entered an order transferring the 778 domain names controlled by Zavala to Bosh. Oh -- by the way, the order did not include any requirement that Bosh follow-through on his promise to contact the rightful owners of the domain names and transfer the names to them. See Bosh v. Zavala, C.D. Cal., No. 2:08-cv-04851, Amended Order (September 24, 2009).
While the judge apparently trusts Bosh and thinks he will do the right thing, her order appears to clearly violate federal and California law. The judge's order was issued pursuant to Federal Rule of Civil Procedure 69(a). FRCP 69(a) states that a federal court may issue an order to execute on a judgment, but "[t]he procedure on execution -- and in proceedings supplementary to and in aid of judgment or execution -- must accord with the procedure of the state where the court is located."
As admitted by Bosh, the California general turnover statute, Code of Civil Procedure Section 699.040 only permits property of the debtor to be turned over to the levying officer. As specifically held by the California Court of Appeal in an opinion issued on June 16, 2009, California law "does not allow a turnover to the judgment creditor." Palacio Del Mar Homeowners Assn., Inc. v. McMahon, 174 Cal.App.4th 1386, 1391 (2009). Moreover, the California turnover statute may only be used for tangible property that may be levied upon by being taken into custody. As further held in Palacio, a domain name is not tangible property, and hence is not subject to California's turnover statute. Id. It's too bad that this on-point case wasn't presented to the judge.
As a result, the Court's turnover order creates an entirely new set of problems. The ACPA defines cybersquatting to include such activities as registering a domain name for the purpose of obtaining a profit from a third party whose trademark is incorporated in the domain name. 15 U.S.C. § 1125(d)(1)(B). But isn't that what Boch's collection plan appears to call for him to do? Recover on his judgment by trading on domain names incorporating third-party trademarks? There also is a fundamental property rights issue: it seems inappropriate for the judge to enter an order that gives Bosh control over domain names in which 700+ other people may have property rights. The ruling also creates a standing issue: what standing does Bosh have to litigate in his private suit trademark claims held by 700+ non-represented persons?
There were legal options, other than simply transferring all 778 domain names to Bosh. For example, the Court could have appointed a receiver to take possession of the domain names and determine how to dispose of them. This procedure appears to be approved by California law for domain names. Palacio, 174 Cal.App.4th at 1390 (noting that the Law Revision Committee comment to CCP Section 708.205 states that the property of the debtor may be turned over to a receiver). This certainly would have been a better option than for a court to give property in which so many third parties could claim rights to a person with whom they have no relationship and over whom the court has no ongoing supervisory authority.
For a further discussion of creditors' rights in domain names, see my post of October 5, 2009.
David D. Johnson is a business lawyer whose practice focuses on litigation and other issues relating to digital media and consumer electronics companies. David can be contacted at (310) 785-5371 or DJohnson@jmbm.com.
