TechLaw

Close Doesn't Count in Cybersquatting

The Anticybersquatting Consumer Protection Act, 15 U.S.C. 1125(d), is the federal law that gives trademark owners a civil claim against persons who act with a "bad faith intent to profit" from registering domain names that are identical or confusingly similar to protected marks. Remedies available to a prevailing trademark owner include an award of statutory damages of up to $100,000 per domain name, plus costs and attorneys' fees in some cases. Losing an ACPA case can ruin your day.

Congress softened the harshness of the ACPA by including a safe harbor for domain registrants who "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). To date, courts have been very stingy with this defense. In Audi AG v. D'Amato, 469 F.3d 534 (6th Cir. 2006), the Sixth Circuit remarked that the safe harbor defense is available "only in the most unusual cases." In Virtual Works Inc. v. Volkswagen of Am. Inc., 238 F.3d 264 (4th Cir. 2001), the Fourth Circuit held that a domain registrant who acts even partially in bad faith is not entitled to the safe harbor. The intent of these cases is clear: cybersquatters won't be allowed to escape liability merely by professing a pure heart or mustering a decent argument that their use of the plaintiff's mark was fair or lawful.

The Ninth Circuit's decision yesterday in Lahoti v. Vericheck Inc., No. 08-35001 (9th Cir., Nov. 16, 2009), is in the same vein as Audi AG and Virtual Works. In Lahoti, the court said that the domain registrant was not entitled to claim the safe harbor defense because it was "unlikely that he legitimately believed that his use of the Domain Name was wholly lawful in this case."

Wholly lawful. To my ear, "wholly lawful" is much more demanding than the language that Congress wrote, which is "believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful." But three federal appellate panels clearly feel otherwise. "Wholly lawful" is a tough standard for anyone to meet, and it proved insurmountable for a garden-variety cybersquatter like Lahoti. The bill of particulars against him:

• Lahoti registered <vericheck.com>, a domain identical to the plaintiff's "Vericheck" Georgia state service mark.
• Lahoti published a collection of outbound links (some pointing to the plaintiff's competitors), not a legitimate offering of goods and services, at the <vericheck.com> domain name.
• Lahoti offered to sell the domain name to the plaintiff for $72,500.
• Lahoti had been adjudicated a cybersquatter in other judicial proceedings.

In most courts' estimation, the above factors are tell-tale signs of a dark, bad faith, cybersquatter heart. In fact, these factors would form the core of any decent "what not to do" list for domainers.

Now, as it turns out, the lower court made a couple legal errors when it ruled that the VeriCheck mark was a "distinctive" mark (and thereby protectable under the ACPA). The appellate court discussed at length how an arguably generic or descriptive mark might become "distinctive," and it sent the case back to the lower court for reconsideration.

So this was a close case as far as whether or not the plaintiff's mark is distinctive enough to support an ACPA claim. However, in this court's estimation, it wasn't a close case as far as whether Lahoti's behavior met the "wholly lawful" standard: 

As we see the record, there is no genuine appellate issue on Lahoti’s bad faith. He has made his cybersquatter bed and now cannot persuasively challenge the district court’s conclusion that he must lie in it. A different case might be presented if Lahoti had a genuine business marketing service for which the Vericheck name was an aid, but there was no credible evidence of that here, nothing but his self-serving affidavit.

A reasonable person in Lahoti’s position—that is, a reasonable person who had previously been declared a cybersquatter in a judicial proceeding—should have known that his actions might be unlawful. Lahoti has previously advanced, unsuccessfully, the same trademark defenses he argues here, including the claim that the mark at issue was only descriptive and that he is entitled to the safe harbor. Lahoti’s failed defenses in these other cases make it unlikely that he legitimately believed that his use of the Domain Name was wholly lawful in this case.

The message I take from this language is that if you have been adjudicated a cybersquatter in a prior proceeding, or you are in the "domaining" or domain name speculation business, you had better knock down the trademark owner's claim to a protectable interest in the mark because you will never convince a court that your registration of the domain was "wholly lawful." Close doesn't count in cybersquatting.

GoDaddy Not Subject to Trademark Infringement Suit in Illinois

In the case of uBID Inc. v. The GoDaddy Group Inc., No. 09-cv-2123 (N.D. Ill., Nov. 5, 2009), a federal district court in Illinois ruled late last week that the Big Daddy of domain name registrars, Godaddy.com, is not subject to the jurisdiction of Illinois courts and need not defend a trademark infringement suit filed there. This is an interesting ruling, though "interesting" in the area of internet jurisdiction is a relative term to say the least.

The plaintiff's trademark infringement theory is a novel one, and the case is well-known in cyberlaw circles. The plaintiff alleged that Godaddy.com is unlawfully profiting from domain name registrations that infringe the plaintiff's UBID trademark -- because Godaddy.com sells advertising on web pages for parked domains. For example, if a person registers a domain name, like <ubidhigherthanme.com>, but does not immediately link the the domain name to a website under the registrant's control, Godaddy.com will temporarily associate the domain name with a web page under Godaddy.com's control and then sell advertising on that web page.

GoDaddy: Everywhere and Yet Nowhere at All (Except Arizona)

Godaddy.com, based in Arizona, is the leading ICANN-accredited registrar of domain names by a wide margin, with reportedly over 32 million domains registered. The court acknowledged that Godaddy.com received 3.19 percent of its revenues from Illinois, a not-inconsiderable sum. Add to that Godaddy.com's pervasive national advertising campaigns and sponsorships in the sport of auto-racing, including events that took place in Illinois. Yet the court found that all of this commercial activity was not enough to subject Godaddy.com to suit in Illinois.

In this court's view, it was important that Godaddy.com's national advertising campaign was not specifically directed to Illinois residents. "Without demonstration of an Illinois-specific focus, GoDaddy's sporadic contacts with Illinois as a result of its national advertising campaign to not support an exercise of general jurisdiction," the court said.

The idea of targeting came up again in the court's discussion of specific jurisdiction, where it ruled that the thousands of transactions (and domain registration contracts) processed by Godaddy.com's website with Illinois residents were not sufficient to create jurisdiction over Godaddy.com. The court seemed to weigh in Godaddy.com's favor the fact that these transactions were automated. Also in Godaddy.com's favor was the fact that Godaddy.com's automated contacts with Illinois residents were initiated by Illinois residents not by Godaddy.com. They were the product of "unilateral activity of a third person," the court wrote.

Asserting jurisdiction over Godaddy.com on the basis of these automated contacts would violate constitutional due process, the court held. It also rejected the Calder "effects test" as a basis for assertion jurisdiction here.

The court also mentioned favorably Godaddy.com's registration contract, which provides for jurisdiction in Arizona, though it didn't make too much of this fact.

I wonder if this ruling is an outlier or a turning point in how courts view jurisdiction over internet sites. If an entity as commercially large and pervasive as Godaddy.com is not subject to the jurisdiction of Illinois courts then, by this court's reasoning, Godaddy.com is not likely to subject to the general jurisdiction of any other forum -- save for Godaddy.com's home state of Arizona. Smaller domain name registrars (all of the others are smaller than Godaddy.com!) should also take comfort from the court's ruling.

Trademark owners alleging infringement tend to prevail on these sorts of jurisdiction challenges, inasmuch as the harm allegedly inflicted by the defendant's infringing activities is felt most keenly in the trademark owner's home jurisdiction. On this point too the court's ruling was somewhat surprising.

The Targeting Trend

Internet jurisdiction cases tend to be all over the map as far as reasoning as each court takes a whack at the novel issues presented, and they are "fact-intensive" as well, which is lawyer-speak meaning that the court's ruling is pretty well tied to the case before it. It is not terribly difficult to distinguish one case, or several cases, and build a good argument for ruling the other way. Myself, I could find a couple dozen cases where scant commercial activity was held to support the assertion of jurisdiction over an out-of-state defendant. That doesn't mean this judge was wrong in uBID v. Godaddy or that this ruling isn't a rational way to look at internet-based jurisdiction problems. It is entirely possible to see this case a part of the recent trend of "targeting" analysis in jurisdiction cases, which is scaling back expansive 1996-2000 era views on internet jurisdiction. In the end, though, I think it just means that the cases are all over the map.

(This doesn't have anything do to with jurisdiction, but I found it interesting that the court's opinion mentioned that Godaddy.com has filed a patent application for a domain registration system that examines the text of a domain name and then prevent advertisements from companies with similarly worded names from appearing on the parked page.)

Finally, a trivial tidbit. The judge in the uBID v. Godaddy case, Charles P. Kocoras, is the same judge who entered a $11.7 million default judgment against United Kingdom-based Spamhaus in a defamation case brought by a company claiming to have been wrongfully tagged by Spamhaus as a spammer. Spamhaus didn't challenge the court's jurisdiction in that case, and I bet they wish they did. Spamhaus's connections with Illinois seem awfully slight in comparison to Godaddy.com's connections. Spamhaus is still trying to get out from under that default judgment. The Seventh Circuit subsequently ruled that Spamhaus was entitled to a hearing on the size of the judgment, and that part of the case has been dragging on for the past two years. On Oct. 8, Judge Kocoras rejected Spamhaus's request for a jury trial on the damages question.

The bottom line for the uBID v. Godaddy case, however, is that if uBID wants to pursue Godaddy.com on trademark infringement claims, it is going to have to do so in Arizona.

Courts, Press Grappling with New Media, New Forms of Journalism

A few days ago several prominent federal judges and attorneys in the Ninth Circuit participated in a conference to discuss the legal system's evolving relationship with the news media and how new online communication technologies are affecting the administration of justice. BNA's Silicon Valley reporter, Joyce Cutler, was there, and she filed the following story for us. The discussion that took place reflected an acute awareness of the changes taking place in the news industry, the pervasiveness of digital devices and user-generated content, the public's growing desire for more information about the legal system, and the need on the part of the judicial system to resolve new policy questions raised by all of these phenomena. Reading through the story, I was struck by the extent to which each district and sometimes each judge is, by necessity, arriving at his or her own conclusion as to what technologies and public disclosures should be permitted in the courtroom. I thought Joyce's article should reach a wider audience, so I am sharing it here.

Courts, Press Grappling with New Media, New Forms of Journalism

SAN FRANCISCO -- At a time the news industry and even Congress are struggling to arrive at a definition of journalism, the judicial system finds itself faced with that same question and several others. Judges and lawyers, who have not yet fully digested the last wave of communications technologies such as television and radio, must now -- by necessity -- resolve a host of new policy issues raised by the next technological revolution: widespread, cheap and tiny information-capturing devices powered by social media.

UPDATE: A few days after this post was written, but before the panel discussion reported here, a federal district court in Georgia, in United States v. Shelnutt, ruled that twittering from inside a courtroom was "broadcasting" forbidden by Rule 53.

The decades-long debate over whether to increase public access to the courts through use of televised proceedings has thus been fused into a new debate over whether and how to allow live-blogging or real-time filing of 140-character Twitter updates in the courtroom, panelists said Nov. 4 at the Northern California federal courts media conference.

The conference, sponsored by the U.S. District Court for the Northern District of California and the Public Information and Community Outreach Committee (PICO) of the U.S. Court of Appeals for the Ninth Circuit, offered insights into what reporters, bloggers, scholars, and judges are grappling with as communication technologies evolve.

Many on the bench are "blissfully ignorant" of what is going on in the media industry and the processes of getting information out in other means than newspapers, Chief Judge Vaughn R. Walker said. "We need to explain what we do, explain our decisions, explain the entire process in a way that people can understand and can have access to."

The Ninth Circuit is unique among the federal circuits in having a public information committee.

Cell Phones In, Video and Still Cameras Out, Everything Else in Play

While most courts now allow cell phones into the courtroom, the rules are different from district to district, said Judge Susan Illston, in the Northern District. Rules on laptop computers, which allow real-time communication, vary "very much from courtroom to courtroom," Illston said.

Illston added that she has no prohibition about laptops in her courtroom "provided the keys aren't noisy" and disruptive.

Taking photographs is still prohibited across all federal courts.

The variation in rules can be problematic, said Peter Scheer, executive director of the First Amendment Coalition. The federal rule prohibiting broadcast television from courtrooms is so broad that it includes ordinary tape recording, he said. "But politically things are changing in Washington," and there is considerable sentiment to change the rule if the judiciary does not act, Scheer said. He predicted that the ban would be "greatly relaxed" within the next two years. "At the moment, unfortunately, people can't learn nearly as much about important cases as they should be able to," Scheer said.

Federal courts are still where they were 30 years ago when broadcast television at its zenith, he said. Legal blogs, including SCOTUSBLOG and Ninth Circuit Blog, follow the courts and show how quickly information can get to the public, said Melissa Griffin, who runs Sweet Melissa blog covering San Francisco politics and law.

Eric Goldman, a professor at the Santa Clara University Law School, said blogging is "both a complement and a substitute for what law professors have done in the past." Goldman blogs about cases involving the internet and intellectual property. "Really, the point is if we have an open courtroom where people are allowed in, they're all potential bloggers and there is no security through obscurity any more. Those days are over. That information will leak out one way or another, and you'll have to approach the information accordingly," Goldman said. "Kick out the Blackberries, that's fine. I will take my notepad and my pen and I will blog about it after the trial or after the courtroom. The point isn't just how you kick out the technology from the courtroom. That strikes me as really a non sequitur. The real issue is the control of information in the courtroom," Goldman said.

Shrinking Media Presence in Courtroom

Given the current-day realities of the newspaper industry, "we have fewer and fewer people covering the courts, and so the idea that your local newspaper is going to have a reporter in the courtroom covering a proceeding, those days are gone," said Kelli Sager, a partner with Davis Wright Tremaine in Los Angeles and a member of the Ninth Circuit PICO Committee.

The court has to be more proactive about making information available quickly, said Sager, noting that PICO is working on more alternatives to increase availability of information. But, she cautioned, "there is going to be a period of time when we just have less coverage of the courts by the media unless we make it easier."

Even with the decline in newspapers, mainstream media is still the primary presence in the courtroom, Scheer said.

Illston, who is overseeing the Barry Bonds prosecution involving allegations that he lied to a grand jury about steroid use, said that her court worked to ensure the process was "as media friendly as it could be." The court wired audio and video into the ceremonial courtroom down the hall so people could listen and see the proceedings. "The advantage of course there is you're in private effectively so if you want to clatter on your computer that's OK, if you want to be noisy, that's OK, if you even want to second-guess the court's rulings, that's OK as long as you don't put it in your articles," Illston said.

The same system has been used in the Ninth Circuit for high-profile oral arguments. The "nightmare vision" was if more people want to come in than there is space, raising a host of issues, including who is a journalist, she said.

"Those are really tough questions today," Illston said.

Is It Necessary to Define Who is a Journalist?

Access is an issue when police departments provide press passes that allow journalists to cross police lines because not all reporters need to be on the scene of a disaster, Griffin noted. And the distinction of who is a journalist is arbitrary, she said. The problem of defining a journalist arises "when you have to ration space," said Scheer, noting the problems that arose when Scooter Libby was on trial in the case over who leaked CIA operative Valerie Plame's name to the media.

In the Libby case, the court allocated a journalist seat for a blogger, Sager said. "There is no recognized, neutral credentialing authority," Scheer said, "and there are many kinds of people using different kinds of technology who call themselves and are generally viewed as journalists than was the case a few years ago."

"The courts don't want to be in the business and shouldn't be in the business of drawing lines and deciding who is a journalist and who is not," Scheer said. "I would let people decide for themselves whether they're journalists, and the only question is whether they are willing to abide by the basic rules" of the court, Scheer said.

"Credentialing is not the answer," Jennifer Granick, civil liberties director for the Electronic Frontier Foundation, said. "First of all, I don't think credentialing can be constitutionally done." Also, Granick said, courts and lawyers do not have much interest in the job of credentialing journalists.

Blogger Griffin remarked that one possibility might be to credential journalists based on circulation or whether they are regularly engaged in the activity.

"It's going to evolve. It has to evolve. Sadly, the courts are being put in the unfortunate situation," Griffin said. "They may have to be on the forefront of this because of the ability to make reasoned inferences based on multiple pieces of information that other organizations may not be able to do. The court may find itself stuck doing this but I think ultimately there's going to have to be a third way of doing this because it's getting more and more complicated."

A proposed federal shield law (S. 448, awaiting action in the Senate Judiciary Committee) defines journalists as those who are regularly engaged in gathering and disseminating information to the public regardless of whether they are getting paid. This definition covres freelancers and online journalists.

Sager said that her "perfect solution" is to stream the information over the internet or on CSPN and make it available to everyone. "Then you don't have to fight about those issues about who's a journalist and who's not," she said.

News Media Influence on Jurors

Electronic communication has also changed the way the judge admonishes the jury about rules of evidence, said Illston. The warning not to read anything in the newspaper "is now the beginning of a very long paragraph of things they're not supposed to be doing" that includes telling them not to blog or Twitter or search the internet to research the case, Illston said.

"Really, it's an effort to sequester without sequestering the jury," Illston said. "And what we do then is to rely on their good faith in doing what we ordered them to do. And mostly it works."

Judge Jeremy Fogel of the Northern District said that he spends about 10 minutes on the list of prohibited activities, including blogging, e-mailing, Facebook entries, and Twitter. "I think the problem is things are moving so fast that there's so many ways for people to get information that we just can't anticipate all the problems we're going to have," Fogel said.

Judge Howard Matz, of the Central District of California, remarked that no juror in fact reaches a decision in vacuum. "There is no simple solution to immunizing jurors from extraneous influences," Matz said. Without explaining to jurors very specific information about what fairness in a jury trial requires, "I think we're going to have decisions badly warped. This has already begun to happen with jurors twittering about their ongoing experiences. And not necessarily about the evidence but about the dress of the lawyers or whether a particular lawyer is 'hot,' " Matz said.

Judicial Response to Public Access Issues

Four years ago, the Northern District published General Order No. 58, a local rule that defines an electronic device and establishes limitations on their use. The is rule is now "completely obsolete," Fogel said. Having been written before the iPhone, before Twitter and Facebook, the rule "has nothing to do with the world we in which we live," Fogel said.

"Technology has expanded and exploded so fast that while [Order No. 58] is an interesting artifact, it really doesn't mean anything," Fogel said.

Granick praised the Public Access to Court Electronic Records (PACER) system as really making a difference and allowing individuals to follow other people's cases. The downside of PACER, she added, is it is behind a pay wall and has fragmented search that does not allow for tracking of cases by subject matter. Granick commented -- and the panel agreed -- that more documents are filed under seal than ever before out of caution about the material available in the record and fears about what information would be reported upon.

Fogel said that his court, which is based in his San Jose, Calif., regularly deals with disputes involving valuable intellectual property. "If somebody reports on something they're not supposed to report, it can lead to stock price manipulation, the loss of proprietary rights that could cost people hundreds of millions of dollars," he said. "So the stakes are high. And my concern isn't keeping the media out because I'd like the media to be in. It's a question of how to think about the problems in a way that doesn't overly restrict but nonetheless protects the interests of people," Fogel said.

By Joyce E. Cutler