Digital Media Lawyer Blog

Web sites can be accessed virtually everywhere. A frequent worry of website operators is that a court in some distant state will find that it has personal jurisdiction over them and force them to defend a suit far from home. While it often seems that courts are biased towards assuming jurisdiction over defendants, two recent cases dealing with personal jurisdiction over alleged typo-squatters show that there are true limits:

In Ubid, Inc. v. The GoDaddy Group, Inc., N.D. Ill., No. 1:09-cv-02123, an Illinois District Court found that it lacked personal jurisdiction over an Arizona corporation for alleged typosquatting which affected a Chicago business. On the other hand, in Weather Underground, Inc. v. Navigation Catalyst Systems, Inc., E.D. Mich., No. 2:09-cv-10756, a Michigan District Court found that it had personal jurisdiction over a defendant for alleged typosquatting that affected a Michigan resident, even though the defendant was a Delaware corporation.

What led to these different results?

Whether a court may assume personal jurisdiction over a non-resident defendant depends on the amount of contact the defendant has with the state. If a defendant has "continuous and systematic contacts" with the state, a court may assume "general jurisdiction" over it, regardless of its contacts with the state for the transaction at issue in the case. Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408 (1984). Even where such systematic contacts are lacking, a court may assume "specific jurisdiction" over the defendant for the transaction at issue in the suit, if the suit arises out of the defendant's intentional contacts with the state. Id.

In both Ubid and Weather Underground, the courts found that the defendants lacked sufficient contacts with the "forum state" -- the state where the court was located -- for general jurisdiction. The Weather Underground case wasn't close, since defendant Navigation's sole contacts with Michigan had been the sale of eight domain names to Michigan residents over a period of 3 years. The Ubid case was harder: GoDaddy derived 3% of its revenues from Illinois, regularly conducted business with Illinois customers, placed advertisements in Illinois as part of national ad campaigns and sponsored race drivers at Illinois venues. Nevertheless, because all of these activities lacked an "Illinois-specific focus," the court found that they would not support a finding of general jurisdiction.

However, the courts reached opposite conclusions on specific jurisdiction.

Continue reading "Ubid v. Godaddy and Weather Underground v. Navigation Catalyst: How the "Effects Test" Drove the Courts to Opposite Rulings on Personal Jurisdiction" »

It seems unthinkable. How can a business that has registered and used a trademark for a decade lose an ACPA case against a serial cybersquatter who has been adjudicated to have used the mark at issue in bad faith? The fact is that it can and does happen. When a plaintiff sues under the Anti-Cybersquatting Consumer Protection Act, it must prove that it owns a valid trademark. 15 U.S.C. § 1125(d). This means that an ACPA suit puts the validity of the plaintiff's trademark at issue. And if the defendant chooses to put up a fight, the end result of an ACPA suit can be that the plaintiff's trade name loses protection as a trademark.

This was the result in American Blind. It also may be the result in Lahoti v. Vericheck, 9th Cir., No. 08-35001. Lahoti is the defendant in a trademark infringement and ACPA case brought by Vericheck, Inc. Vericheck is a Georgia corporation that provides electronic fund transaction processing services, including check verification and account verification. Vericheck has a website at vericheck.net and also owns the domain names vericheck.org, vericheck.cc, vericheck.us and vericheck.biz.

In 2001, Vericheck obtained a Georgia state service mark registration for its trademark, which consists of a checkmark over the word "VeriCheck." Vericheck attempted to get federal registration, but the U.S. Patent and Trademark Office denied the application because an Arizona company had already registered the name for use in check verification services. However, the Arizona company apparently never used the trademark for check verification and its mark expired in 2006.

According to the 9th Circuit, the defendant, David Lahoti, had previously registered over 400 domain names containing the trademarks of other companies, such as Nissan.org and ebays.com. In two cases, WIPO ordered him to give up control of domain names because they infringed on trademarks. In 2000, a Central District of California court found that Lahoti was a "cybersquatter" and that his registration and attempted sale of the estamps.com domain name violated the ACPA.

Continue reading "Lahoti v. Vericheck: How to Lose a Cybersqatting Case against a Serial Cybersquatter" »

Digital media law update: A September 30, 2009 decision supports a contention we have made for some time: use of a personal name in a gripe or parody website is unlikely to support a cause of action under trademark law. The exception is when a website misuses a famous name that has become synonymous with a business. However, as this decision also shows, even if your name isn't famous, that doesn't mean you have no legal remedy. You still may be able to sue and recover significant damages under defamation or privacy law.

The case is Bernard J. Carl v. BernardJCarl.com, D.C. Vir., No. 1:07-cv-1128. The Plaintiff, Carl, founded a private equity firm called Brazos Europe, Inc. In 2005, Brazos acquired the French linen company, D. Porthault. Brazos retained the French law firm Darrois Villey & Maillot (Darrois) to facilitate the transaction. Darrois, without Brazos' knowledge, subcontracted some of the work to the law firm Cotty Vivant Marchisio & Lauzeral ("Marchisio").

After the closing, Marchisio claimed that Brazos failed to pay it for its work. Brazos responded that Marchisio's work was defective. Marchisio then sued Brazos in a French court -- but lost! Marchisio, however, was not dissuaded. Instead of slinking away, it registered the domain name "bernardjcarl.com" and posted the following message on the site:

Message to the attention of Brazos Europe Inc. and managing partners Mr Bernard J. Carl and Mrs Shannon Fairbanks

In the meantime, feel free to meditate Benjamin Franklin: "Creditors have better memories than debtors." . . . .

The object of this message, Bernard J. Carl, contended that the statement was false and defamatory. He never hired Manchisio and owed it nothing. He also claimed that several potential investors in Brazos raised questions about the claims in the site. Accordingly, he filed suit -- first against the website, and then against its author Manchisio. His suit ultimately proceeded against Manchisio on three theories: (i) false representation under federal trademark law, based on Manchisio's use of his name "Bernard J. Carl" in the domain name of the website (15 U.S.C. § 1125(a)), (ii) cybersquatting under the Anti-cybersquatting Consumer Protection Act, for Manchisio's use of his name (15 U.S.C. § 1125(b)), (iii) cyberpiracy, also for the use of his name (15 U.S.C. § 1129(a)), and (iv) common law libel.

Continue reading "Carl v. BernardJCarl.com: Co-option of Personal Name for Gripe Website Supports Cause of Action for Defamation, but Not Trademark Infringement or Cybersquatting" »

Treatises often claim that WIPO and NAF cybersquatting decisions lack precedential value. However, WIPO and NAF decisions routinely cite and rely on other WIPO and NAF decisions. Federal courts ruling on cybersquatting cases also pay attention to prior WIPO and NAF decisions. A case in point was the recent decision in Wilcox Associates, Inc. v. Xspect Solutions, E.D.Mich, Case No. 08-14695 (Sept. 24, 2009) in which Judge Hood's decision to reject Xpect's laches defense was almost entirely driven by a prior WIPO decision in a related case.

Wilcox manufactures CMMs -- "coordinate measuring devices" -- which are used by manufacturers to measure and reproduce three-dimensional products. Wilcox sells these devices under the Brown & Sharpe, Hexagon, Romer and other trademarks.

In 2004-2005, the Xspect, a competitor in the CMM business with Wilcox, registered 52 domain names that incorporated Wilcox's trademarks. These domain names included Brownsharp-cmm.info, Hexagon-cmm.com, and Romer-arm.info. Xspect used these domain names to direct traffic to its website. Xspect's website also claimed that Xspect was an "approved source" for machines produced by Wilcox -- even though Xspect's goods are not affiliated with Wilcox's. For example, Xspect's website displays a photograph of a Brown and Sharpe CMM along with the heading "We are the Factory."

In 2005, the Plaintiffs filed a complaint with WIPO regarding 42 of the 52 domain names. After the Xspect failed to respond to this complaint, the WIPO Panelist found for the Plaintiffs. As part of his decision, the WIPO Panelist that Xspect had engaged in bad faith by registering the Plaintiffs' trademarks as domain names. According to the Panelist, these domain names "form[ed] a vast trap or funnel through which Internet users looking for Complainants' products [we]re actually redirected to Respondent's website."

While Wilcox was successful on this complaint, it somehow overlooked 10 additional domain names that Xspect had registered and that also incorporated the Plaintiffs marks. In 2008, Wilcox realized its error and filed suit in federal court to enjoin use of these names as well. This time, in addition to seeking an injunction against Xspect's further use of these names -- which is about all a Plaintiff can get in a WIPO proceeding -- Wilcox also sued for damages and attorneys fees.

As part of its defense to the suit, Xspect raised the laches defense. A laches defense bars recovery by a plaintiff who has waited an unreasonably long time to bring suit and thus prejudiced the defendant. In the 6th Circuit -- were this case was decided -- a defendant who asserts a laches defense must show: (1) that the plaintiff was not diligent in pursuing its trademark claim against the defendant, and (2) that the plaintiff's delay caused prejudice to the defendant. Natron Corp. v. STMicroelectronics, Inc., 305 F.3d 397, 408 (6th Cir. 2002).

In the 6th Circuit, if the statute of limitations for the plaintiffs' trademark claim has expired prior to the plaintiff's bringing suit, then this creates a presumption that the plaintiff's delay has been prejudicial to the defendant. Id. To overcome this presumption, plaintiff must either (1) rebut the presumption of prejudice; (2) establish that there is a good excuse for its delay; or (3) show that the defendant engaged in "particularly egregious conduct which would change the equities significantly in the plaintiff's favor." Id. at 409.

Continue reading "Wilcox Associates v. Xspect Solutions: Court Finding of Bad Faith Was Primarily Based on Prior WIPO Finding that Defendant Acted in Bad Faith" »

Combatants in cybersquatting or domain name disputes are often not aware of the great degree to which the result they get depends on the judicial body that makes the decision. A clear illustration of how forum choice affects results can be seen in the widely varying deference given by the different judicial bodies to a defendant's assertion of a "laches" defense to a cybersquatting complaint.

A laches defense has a lot in common with a statute of limitations defense. When recognized by a judge, it bars recovery by a plaintiff who has waited an unreasonably long time to bring suit and thus prejudiced the defendant. Judges tend to allow a laches defense when a plaintiff has deliberately delayed bringing its suit until key evidence has been lost, witnesses have died, or the memories of witnesses have grown stale. The defense may also be allowed where a defendant has relied on the plaintiff's long delay in bringing suit to build up a valuable business around a trademark.

To resolve a dispute over a domain name, a U.S. plaintiff may file a suit in Federal court under the Anti-Cybersquatting Consumer Protection Act. See 15 U.S.C. § 1125(d). If the dispute is over a "generic top-level domain name" (e.g., .com, .org, .biz) or certain country top-level domain names, it can file for arbitration using ICANN's dispute resolution system -- called UDRP (for Uniform Dispute Resolution Policy). Under UDRP, a plaintiff (called a "complainant") can choose to have its domain name dispute resolved by one of four ICANN-approved resolution providers. The two providers that are most commonly used by U.S. firms are the National Arbitration Forum (NAF), a private ADR firm, headquartered in Minneapolis, and the World Intellectual Property Organization (WIPO), a U.N. agency. (Fn1)

Cybersquatting cases area subspecies of trademark infringement cases, so in theory laches should be permitted as a defense. In practice, the availability of laches varies greatly, depending on which of these three tribunals -- Federal court, NAF or WIPO -- decides the case.

Federal courts

The greatest deference to the laches defense is given in Federal courts. At least five federal courts have found that this defense can be applied to cybersquatting claims. These include the 6th Circuit, and District Courts in the 1st, 7th and 11th Circuits. (Fn2)

For example, in September 2008, in Southern Grouts & Mortars, Inc. v. 3M Co. (S.D. Fla., No. 0:07-cv-61388), a Florida District Court dismissed a cybersquatting case concerning the domain name diamondbrite.com on laches grounds. The Court found that the plaintiff knew that 3M owned the diamondbrite.com domain and that the domain was inactive as early as July 2002, but neglected to bring suit for five years. During this intervening period, the plaintiff made little attempt to assert its claim to the name, only sending two letters and one email to 3M regarding the domain. The delay had also prejudiced 3M. Many of 3M's employees who had information regarding its acquisition and use of the diamondbrite.com name had left its employ, and relevant documents have been destroyed or lost.

Continue reading "Federal Court or UDRP Arbitration? How the Forum that Decides a Domain Name Dispute Can Make a Big Difference in the Results" »

Digital media law: Startling high damage awards in a number of recent copyright, trademark and cybersquatting cases are often the result of simple math. Plaintiffs in these cases have the right to demand an award of statutory damages in lieu of proving actual damages. In each case, the amount of damages is tied to the number of copyrighted works or trademarks infringed, or the number of infringing domain names. It is very common for juries or judges to make per violation awards of $50,000 to $1,000,000 and more. Where a defendant has committed infringements of multiple works or marks, using simple math, it is quite easy to get to damage awards in the tens of millions of dollars -- regardless of the actual harm suffered by the plaintiff or the profits earned by the defendant.

Here is the short and skinny law on these types of statutory damages:

• The Copyright Act provides for a minimum statutory award of $750 and a maximum of $30,000 for each copyright infringed. If the plaintiff proves that the infringement was willful, the maximum damage award is raised to $150,000. 17 U.S.C. § 504(c)(1), (2).

• The Lanham Act provides for statutory damages in trademark cases involving "counterfeit marks" of not less than $1,000 or more than $200,000 per counterfeit mark per type of good or services sold, offered for sale or distributed. The maximum is raised to $2,000,000 for willful infringement. 15 U.S.C. § 1117(c).

• The Anti-Cybersquatting Protection Act permits statutory damage awards of not less than $1,000 and not more than $100,000 per domain name. 15 U.S.C. § 1117(d). Courts take factors such as willfulness into account in determining the appropriate amount of statutory damages.

In all three cases, the plaintiff may elect an award of statutory damages, in lieu of actual damages, at any time before entry of final judgment.

Here are some recent examples of how the "math" of statutory damages has played out:

• Microsoft Corp. v. McGee, 490 F.Supp.2d 874 (S.D. Ohio 2007):
Microsoft brought this copyright and trademark infringement suit against the operator of the Computerme.net website, which sold and installed a variety of Microsoft software products. According to Microsoft, in August 2006 the defendant sold a counterfeit copy of Office 2000 Pro to a Microsoft investigator. Microsoft ultimately sued for infringement of five of its trademarks and seven of its copyrights. The defendant defaulted and Microsoft sought an award of statutory damages.

The Court found that the defendant had acted willfully because it had failed to respond to Microsoft's demand letters and had defaulted at trial. However, because Microsoft had only requested the maximum amount of non-willful damages for trademark and copyright infringement, the Court awarded just that: $30,000 each for the 7 copyrights infringed ($210,000) and $100,000 each for the 5 trademarks infringed ($500,000) -- a total of $710,000.

Continue reading "Akanoc, OnlineNIC and Computerme : Suits Involving Multiple Copyright, Trademark or Cybersquatting Claims Provide Opportunities for Startling Statutory Damage Awards" »

I should have anticipated this. On the very same day (August 25) that I posted a blog entry questioning whether the predicted flood of Twitter-squatting suits would ever arrive -- a suit that verges on Twitter-squatting or Twitter-jacking was announced.

The case involves transgender, Nampa, Idaho mayoral candidate Melissa Sue Robinson. According to the local Fox radio affiliate, Ms. Robinson discovered that someone had created a Twitter account under her name and displaying her photograph with the title "woman with a penis." She reportedly asked Twitter to remove the account, but got did not get immediate action to remove the site.

Twitter's Terms of Use provide that users "must not abuse, harass, threaten, impersonate or intimidate other Twitter users." The Terms of Use also state that violations of this or other Twitter policies "will result in the termination of your Twitter.com account." My own check of the Twitter site yesterday indicated that the account has been deactivated. So apparently, Twitter has now acted on Ms. Robinson's complaint and terminated the account under its stated policies.

Ms. Robinson is reported to be in the process of unmasking the identity of the anonymous blogger. Prospective plaintiffs seeking to sue an anonymous blogger are often required to commence legal proceedings against the blog host to uncover the blogger's identity. However, this may not be necessary here. Twitter's Privacy Policy includes the following provision:

"Compliance with Laws and Law Enforcement: Twitter cooperates with government and law enforcement officials or private parties to enforce and comply with the law. We may disclose any information about you to government or law enforcement officials or private parties as we, in our sole discretion, believe necessary or appropriate to respond to claims, legal process (including subpoenas), to protect the property and rights of Twitter or a third party, the safety of the public or any person, to prevent or stop any illegal, unethical, or legally actionable activity, or to comply with the law."

This suggests that Twitter may be willing to voluntarily provide the name of the blogger without requiring Ms. Robinson to institute court proceedings against it.

Ms. Robinson has indicated that she plans to file an action for defamation and invasion of privacy against the blogger, once his/her identity is revealed. While Ms. Robinson may have an actionable claim against the blogger, I would not expect her to be able to maintain similar claims against Twitter, because these causes of action would likely be blocked by the Communications Decency Act.

Ms. Robinson's case may technically not be a case of Twitter-squatting, because it is unclear whether the Twitter account at issue was under her name, or whether it merely referenced her name in a tweet. If her name was not part of the account name, then it may be better to categorize this as a case of Twitter-harrassment. While the flood of Twitter-squatting suits may not yet be here, this case represents at least one drop of rain.

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.

Twitter accounts, like the Internet domain names, are named-based. As a result, Twitter long ago developed problems that mirror Internet domain name cybersquatting -- namely, twittersquatting or twitterjacking. Twittersquatting is when a third party registers a trademark or a famous person's name as a Twitter username with the intent to cause confusion or mischief. Twittersquatting has already become extremely widespread. According to one report, as of January 2009, of the top 100 global brands, 93% had their Twitter names taken by someone else.

So what are Twittersquatters doing with their borrowed trademarks? The same things they did with borrow trademarks on the Web -- in many cases, using them to sell products unrelated to the trademark name, or simply holding them for sale. A visit to the Armani Twitter account on August 23rd, 2009 showed that the latest "tweet" was the following: "Retweet this! Xanax, Oxy, Valium, Vicodin, Viagra! over night shipping and no doctors required! http://supplymedd.com."

Other twittersquatters are using their Twitter names to harass, embarrass or satirize the holder of the mark of famous name. One of the best known cases was the Twitter site set up by a prankster in the name of St. Louis Cardinals manager Tony La Russa. The site, which purported to have been set up by LaRussa himself, contained posts criticizing Cardinal players or describing LaRussa's drinking habits. One entry read: "Lost 2 out of 3, but we made it out of Chicago without one drunk driving incident or dead pitcher . . . I'd call that an I-55 series." The fake LaRussa account also included the note: "Bio Parodies are fun for everyone."

With all of this twittersquatting, many commentators have assumed that we would see a flood of trademark infringement lawsuits. Some have even called for the creation of an digital media industry-wide Uniform Username Dispute Resolution Policy which would mirror ICANN's domain name dispute resolution system -- the Uniform Domain Name Dispute Resolution Policy (UDRP).

So why hasn't the flood of trademark infringement lawsuits occurred? One answer could be the control that Twitter retains over its accounts. Under its Terms of Use, Twitter "reserve[s] the right to reclaim usernames on behalf of businesses or individuals that hold a legal claim or trademark on those usernames." Given this retained power, a business interested in protecting its mark may be able to eliminate a cybersquatter through a simple request to Twitter. Of course, dispute resolution could get more troublesome where multiple persons are using the same mark. Another answer -- given the continued presence of so much obvious twittersquatting -- is that many trademark holders don't yet see sufficient business value in Twitter to take action.

So far, the only twittersquatting suit has gained notoriety was Tony LaRussa's suit earlier this summer against Twitter regarding the satire site described above. LaRussa v. Twitter, Inc., San Francisco Superior Court, Case No. CGC-09.488101. This suit did not last long: it was filed in May 2009 and voluntarily dismissed only six weeks later, apparently as the result of a settlement. A recent visit to the LaRussa Twitter account showed that the site had been taken over by Tony LaRussa himself, and contained a link to LaRussa's animal rescue foundation. See http://twitter.com/tonylarussa.

Continue reading "Digital Media Law: Where is the flood of Twitter-squatting lawsuits?" »

The Internet has a worldwide reach. It is easy for a cybersquatter who resides in a foreign country to gain control over an Internet domain name without ever setting foot or engaging in a transaction in the U.S. However, under traditional rules for jurisdiction, it was often not possible for a trademark owner to bring an action in a U.S. court against a foreign defendant who had gained control over a domain name that infringed the plaintiff's mark.

For example, personal jurisdiction rules do not permit a foreign defendant to be sued in federal court if the defendant is not physically available to be served in the state where the court is located, the transaction at issue did not occur in the state, or the defendant does not have systematic dealings with the state. Diversity jurisdiction rules do not permit a citizen of one foreign country to bring a suit against a citizen of another foreign country in federal court if neither resides in the U.S. 28 U.S.C. § 1332.

In 1999, Congress enacted the Anticybersquatting Consumer Protection Act (ACPA) to deal with these problems. See 15 U.S.C. § 1125(d). The ACPA gave the owner of a "mark" the right to bring suit if another person, "registers, traffics in or uses a domain name" with "a bad faith intent to profit from that mark." Id. at 1125(d)(1)(A). The ACPA expanded the scope of its protection of "marks," to include to include personal names, as well as traditional trademarks.

The ACPA also addressed the thorny problems of jurisdiction, described above. Questions about subject matter jurisdiction were resolved by the mere fact that the ACPA was a federal law -- thus permitting litigants to bypass diversity jurisdiction and sue on federal question grounds. 28 U.S.C. § 1331, 1338. Problems with obtaining personal jurisdiction over foreign defendants were swept away by permitting the owner of a trademark to file its cybersquatting complaint as an in rem action in the judicial district(s) in which either the domain name registrar or the domain name registry was located. 15 U.S.C. § 1125(d)(2)(A).

The registry for the most popular general Top Level Domain names (gTLDs) -- .com, .org and .net -- is VeriSign, which is located in Virginia. The registries for the gTLDs .eduand .gov are maintained by U.S. government agencies, and hence also located in the U.S. This means that an in rem action can be brought regarding domain names ending in these, and certain other popular suffixes, in U.S. federal courts, regardless of the location of the registrar or the registrant.

Continue reading "Digital media law: Koenig v. ALL.COM case shows the power of rem jurisdiction in resolving cybersquatting disputes" »