TechLaw

Domain Name Deemed Tangible Property (Web Pages Too) in Utah

There's a passage in T.S. Eliot's 1922 essay "The Perfect Critic" that goes like this:

The vast accumulations of knowledge -- or at least of information -- deposited by the nineteenth century have been responsible for an equally vast ignorance. When there is so much to be known, when there are so many fields of knowledge in which the same words are used with different meanings, when every one knows a little about a great many things, it becomes increasingly difficult for anyone to know whether he knows what he is talking about or not.

I feel like that a lot, especially when it comes to cyberlaw. There are so many fields of law, each with their own specialized but overlapping vocabularies, each attempting to advance their own policy objectives, some shaped by frequent contemporary debate, some resting undisturbed for decades, all being applied in a haphazard fashion to the internet. The internet is reportedly 40 years old this week, yet the legal profession's take on it is not yet out of beta.

Consider domain names and web pages, two basic components of the internet. What exactly are they, in the eyes of the law? No one can say for sure. The Virginia Supreme Court ruled in Network Solutions Inc. v. Umbro International Inc., 529 S.E. 2d 80 (Va. 2000), that a domain name was a mere contractual right under Virginia law, not a property right subject to garnishment. A few years later, a federal appellate court, Kremen v. Cohen, 325 F.3d 1035 (9th Cir. 2003), held that a domain name was intangible property, the wrongful disposal of which by another could constitute "conversion." Under California law.

As for web pages, the creative expression displayed on a web page is protected by the Copyright Act. Other theories like trade dress, patent, state-law misappropriation are speculative at best.

Into this void two very interesting opinions were recently dropped by federal courts located in Utah. The first one, Margae Inc. v. Clear Link Technologies LLC, No. 2:07-cv-916 (D. Utah, May 5, 2009), held that under Utah law web pages were tangible property subject to protection under Utah's conversion doctrine. To reach this conclusion that court looked to a Utah tax law decision and the court's own sense of what a web page is like:

[A] web page has a physical presence on [a] computer drive, causes tangible effects on computers, and can be perceived by the senses. ... Further, Web pages can be physically restricted by the use of passwords and other security measures. In fact, the "conversion" alleged here is that Clear Link has "locked out" Margae's access to web pages.

Last month, in Jubber v. Search Market Direct Inc., No. 06-2299 (Bankr. D. Utah, Aug. 19, 2009), a bankruptcy case, the court said that domain names -- just like web pages -- are tangible property:

Based on the reasoning in Margae, which the Court elects to follow, the Court determines that like web pages and software, domain names can be perceived by the senses and access to them can be physically restricted by the use of passwords and other security measures. ... [The] Court concludes that like web pages and software, the Domain Name at issue is a type of tangible property that is capable of conversion.

(It was important for the court to find that domain names and web pages are tangible property, because under Utah's formulation of the conversion doctrine, intangible property cannot be converted.) I haven't given much thought (save for skepticism) to the implications of these rulings, other than to note that they seem relevant only to situations in which a party has lost control of a website -- either by loss of access to the server or by transfer of the domain name registration. These folks already had computer fraud and business tort remedies, and presumably contract remedies; now they have a property law claim as well. At least in Utah and California.

Zulu Nation's Stirring Bid for Cyber-Homeland Opposed by Celebrity Chef's Wife

"During the ICANN meeting in Sydney, Australia, Gelila Puck shouted within earshot of dozens of ICANN participants, that Minds+Machines should not proceed with its application for <.ZULU>, which had already been approved by the King of the Zulu nation with assistance of the daughter of the President of the Republic of South Africa."

From complaint in Mind+Machines LLC v. Puck, No. 09-1237 (W.D. Wash., complaint filed Sept. 1, 2009). Details at Domain Name Wire, "Wolfgang Puck Starts .Food Fight Over Top Level Domain."

Ten Interesting Things I Read This Week

This post is a collection of links to materials I've been reading this week, really just trying to catch up on old news and re-engage myself in subjects that I spent most of my summer trying to forget while on vacation. I made supplications to the Muse all morning in the hope she would favor me with a catchy title, something that might yield one of those tragically sardonic acronyms like CAN-SPAM or SPY Act, but no, nothing, and now it's time to get back to work and all I have is Ten Interesting Things I Read This Week (TITIRTW):

1. Cleveland Plain Dealer: Idea for protecting newspapers draws national spotlight, bloggers' ire

2. Media & Communications Policy: More on Newspapers and Aggregators

At this point management at most of the leading newspapers have let go of the notion that "parasitic aggregators" are a significant source of their business problems. Yet here is a respected attorney (and counsel to the Cleveland Plain Dealer) making an argument that parasitic aggregators who are free-riding on newspaper content should be stopped. Stopped by reviving the common law doctrine of "hot news" misappropriation. He believes that the Copyright Act should be amended so that it no longer preempts state-law misappropriation claims. The attorney writes: "If the legal principles that we advocate in this analysis were the law, the newspaper publisher would have a legal right to enjoin temporarily or otherwise impede the business of an aggregator that commercially exploits the publisher's news reports in direct competition with the publisher." I don't want to "Go Pundit" here, but this is a solution to a problem that just does not exist.

3. Citizen Media Law Blog: Southeastern Conference Sacks Social Media, Then Recovers

A nice account of the Southeastern Conference's attempt to protect the interests of its television broadcast partners by prohibiting fans from blogging, twittering et cetera during football games that reminded me we are still very much at the beginning of the user-generated media era. The article summarizes the state of the law on the "hot news" doctrine, making a nice counterpoint to the "save the newspapers" discussions above. 

4. U.S. Department of Homeland Security: Secretary Napolitano Announces New Directives on Border Searches of Electronic Media

Modest privacy-enhancing protections announced here, though DHS is not giving back an ounce of their authority to search anyone, anything, any time, at the border. Which still includes laptops: "In the course of a border search, with or without individualized suspicion, an Officer may examine electronic devices and may review and analyze the information encountered at the border."

The American Civil Liberties Union filed a lawsuit this week seeking records relating to searches of electronic devices at the border.

5. The Volokh Conspiracy: How the Ninth Circuit Tried To End Plain View for Computer Searches Without Ending Plain View for Computer Searches

Prof. Orin Kerr ruefully labels the en banc Ninth Circuit's decision in United States v. Comprehensive Drug Testing Inc. as Miranda for computer searches. He writes: "I think the best way to understand today's remarkable Ninth Circuit Fourth Amendment decision in United States v. Comprehensive Drug Testing is that the Ninth Circuit did its best to end the plain view exception for computer searches without formally ending plain view for computer searches. Chief Judge Kozinski's opinion created an elaborate statute-like new regime to make sure the government acts like there is no plain view exception. The decision is a workaround that effectively ends plain view for computer searches by making sure the government will never collect electronic evidence in plain view in the first place."

Sounds a little bitter to me. Judge Kozinski's opinion is a sensational read. And if it really is like Miranda, read it, because it's going to be around for a long time.

6 & 7. Gregg Easterbrook (ESPN): Tuesday Morning Quarterback's AFC preview and TMQ travels back in time to August 2009

A personal favorite, a guilty pleasure, one of the best writers on the Web, reminds me of Tom Wolfe way back when. More than football in here too: smart ruminations on Twitter, the British Humanist Association, and deadly objects from space.

8. Consumer Law & Policy Blog: Official Word from US Courts -- Feel Free to Use RECAP With Our Blessing

The implication here is that the AO's office would naturally have disapproved of RECAP, a Firefox addon that uploads PACER documents to a free repository. But surprise surprise it appears they don't mind at all. Am I the only one who believes the judiciary is the most -- not the least -- open branch of the federal government?

9. Spam Notes: Electronic Communications, Privacy, Data Protection, and More: Gordon v. Virtumundo: 9th Cir Smacks Down Anti-Spammers in Trifecta Defense Win

Ah, August 6, 10 a.m. PST. I was fly-fishing a gentlemanly stretch of the Gallatin River in Yellowstone National Park. Wretched souls like Venkat were slogging through Gordon v. Virtumundo's discussion of CAN-SPAM preemption. He writes: "As far as opinions go, this is as good as it gets." I couldn't agree more. About the fishing, of course.

10. Techdirt: Interview With William Patry: Understanding How The Copyright Debate Got Twisted

Prof. William Patry is coming out with a new book, Moral Panics and the Copyright Wars. Here, a very interesting discussion with Techdirt's Mike Masnick draws out Patry's views on fair use, the file-sharing wars, and copyright politics.

Facebook Gives Trademark Owners Chance to Block Infringing Vanity Addresses

We're running the following item tomorrow to alert BNA Electronic Commerce & Law Report readers of the opportunity Facebook is offering trademark owners to preemptively block misappropriation of their marks when Facebook opens up its service to vanity URL registrations tomorrow night. I don't see any reason not to share it more widely. Thank you to the estimable David Kelly at Finnegan, Henderson, Farabow, Garrett & Dunner LLP, who shared his insights as well as a few relevant cases I was unaware of, and to BNA's Amy Bivins, who dashed this off late today.

The Facebook social networking site is taking steps to combat "name squatting" ahead of its June 13 launch of a new feature that will permit users to create vanity URLs incorporating their names, such as http://www.facebook.com/username.

Trademark holders can sign up now to block the registration of their marks. Facebook has already reserved certain names in an effort to assist third parties in protecting intellectual property and other rights.

David Kelly, who chairs the Trademark Group at Finnegan Henderson Farabow Garrett & Dunner LLP in Washington, D.C., told BNA today that the Facebook development is yet another area where trademark owners will have an opportunity to enforce their intellectual property rights.

"The good news is that Facebook at least has guidelines, encourages parties to use their real personal or business names, and has a mechanism for trademark holders to object to the use of their marks in these personalized URLs, though these safeguards will not prevent all username squatting problems," he said.

One issue raised by Facebook's trademark protection mechanism asks mark owners to provide a registered trademark, which implies that common law trademark rights may not be sufficient.

This creates the possibility of a conflict in situations where businesses with similar names are in different markets or geographic areas use the same mark, or situations where users have the same personal name as a celebrity, Kelly said.

Liability Unlikely for Services, but User Liability Possible.

Most widely used social networking sites prohibit unauthorized name and trademark use in their terms of service, and a growing number are banning username squatting--registering accounts associated with names or companies without authorization--specifically.

Under the reasoning in Tiffany v. eBay Inc., it is possible that social networks themselves could be held liable for username squatting, on a contributory infringement liability theory, if they continue to provide services to users they know or have reason to know are engaging in infringement. Tiffany v. eBay Inc., No. 04-4607 (S.D.N.Y. July 14, 2008)(13 ECLR 942, 7/16/08). Under Tiffany, general knowledge that infringement is occurring on a service is not enough to generate contributory liability.

Kelly told BNA that the username squatting issue, from the registrant perspective, is similar to e-mail addresses and screen names, which courts have addressed. For example, in Highfields Capital Management L.P. v. Doe, 385 F. Supp. 2d 969 (N.D. Cal. 2005), a magistrate judge quashed a subpoena requiring Yahoo! to identify a party that posted sarcastic message board comments about a company's stock performance using the company's name.

Finding the comments were not driven by a competitive purpose, and that it was unlikely readers would think the negative comments were in some way sponsored by the company, the court said the use qualified as a fair use.

But in Freedom Calls Foundation v. Bukstel, 2006 WL 845509 (E.D.N.Y. Mar 3, 2006), the court issued a preliminary injunction against a company's former employee, who had set up an e-mail address and instant messenger account using the company's name, concluding the use was likely infringing.

Facebook Plans Name Squatting Protections.

In instructions on the new vanity username program, Facebook directed users to choose a name as close as possible to their true names, and states that names cannot be changed or transferred after they are created.

Facebook is limiting participation to users who were Facebook members prior to its announcement of the program, a restriction designed to deter parties from signing up to "name squat." However, the restriction is temporary: New users will also be able to sign up for vanity usernames beginning June 28.

Facebook provides a link for "rights holders," through which they can prevent the registration of a trademark as a username. The form requires trademark owners to list the trademark as well as the registration number to be blocked. Rights holders do not have to have Facebook accounts to block registration of their marks.

In an effort to combat name squatting, Facebook will not permit the transfer of vanity URLs. If a user cancels an account, the associated URL will not be available as a new Facebook URL. Users will also not be permitted to register generic terms as usernames. Facebook said that it reserves the right to remove or reclaim a username at any time and for any reason.

Twitter to Test Verified Accounts.

Facebook's announcement comes against the backdrop of a high-profile lawsuit against another social networking site, Twitter, brought by a public figure who was impersonated on the Twitter site.

St. Louis Cardinals manager Tony La Russa filed his complaint in the San Francisco Superior Court, asserting trademark infringement, false designation of origin, dilution, cybersquatting, misappropriation, invasion of privacy, and intentional misrepresentation claims (La Russa v. Twitter Inc., Cal. Super. Ct., No. 02487393, complaint filed 5/6/09). He attached to the complaint a series of updates, or Tweets, which the user posted as "TonyLaRussa."

Twitter removed the action to federal court on June 5. The next day, a Twitter official blogged that the La Russa complaint was an "unnecessary waste of judicial resources," asserting that the company's Terms of Use are fair to rights holders. The blog post further revealed that Twitter plans to test a verified account system this summer, through which public officials, public agencies, famous artists, athletes, and other well-known individuals at risk of impersonation can create accounts verified by a seal.

By Amy E. Bivins

Links:

Facebook's form for trademark owners to block mark registration.

Facebook's IP infringement notification form.

La Russa's complaint against Twitter.

Update: Morrison & Foerster has an alert on the Facebook situation.

Ninth Circuit Breathes New Life Into Antitrust Action Against VeriSign

The Ninth Circuit today reversed the district court's dismissal of antitrust claims against registry operator Verisign Inc., holding that the Coalition for ICANN Transparency had alleged viable causes of action for predatory pricing in the .com top-level domain and for attempted monopolization of the market for expiring domain names.

A key passage on the predatory pricing claim from the court's opinion:

CFIT has essentially alleged that ICANN is a private standards-setting body akin to the NFPA. ICANN administers the DNS and is responsible for entering into agreements with registry operators like VeriSign. According to the complaint, ICANN’s mission includes a commitment to promoting competition for the contracts. CFIT’s allegations further state that ICANN, like the NFPA, is a private body with no public accountability. These allegations are consistent with the view held by commentators on the subject, who have, indeed, identified Allied Tube as providing the strongest argument in favor of imposing antitrust liability on those who seek to coerce ICANN. See Michael Froomkin & Mark A. Lemley, ICANN and Antitrust, 1 U. Ill. L. Rev. 1, 72-73 (2003) (noting that “given ICANN’s private status, VeriSign will face antitrust liability for persuading a private company in a position of power to grant it control over a market,” and naming Allied Tube as the “closest analogue”). We hold, therefore, that pursuant to The Supreme Court’s holding in Allied Tube, CFIT has adequately alleged that VeriSign’s improper coercion of ICANN and attempts to control ICANN’s operations in its own favor violated Section 2.

The case is Coalition for ICANN Transparency v. VeriSign Inc., No. 07-16151 (9th Cir. June 5, 2009).

One likely venue of reaction to this decision is Discourse.net, a blog written by Prof. Michael Froomkin, whose work was quoted by the Ninth Circuit in the passage above.

Justice Sotomayor's Potential Cyberlaw Influence? Not Much

It was pleasant to note the other day that Judge Sonia Sotomayor, President Obama's choice for Associate Supreme Court Justice, has written a few opinions relating to Internet law during her time as judge in the lower federal courts. A first, apparently, and a sign of the centrality of the Internet in our business and personal affairs. From now on, the high court nominee who doesn't have a few cyberlaw decisions on his or her resume will be the remarkable case.

But does a Justice Sotomayor mean anything for the future direction of the laws that regulate online activity? No, not really. Not in the near future.

Consider this:

The Supreme Court has never reviewed a case involving the Computer Fraud and Abuse Act.

The Supreme Court has never reviewed a case involving the Electronic Communications Privacy Act.

The Supreme Court has never reviewed a case involving Section 230 of the Communications Decency Act (which gives interactive computer services immunity from most claims arising from the publication of third-party content), though it did consider, and strike down, the prohibitions against indecent online speech contained in another part of the CDA in Reno v. American Civil Liberties Union, 521 U.S. 844 (1997).

The Supreme Court has never reviewed a case involving the CAN-SPAM Act or the Digital Millennium Copyright Act.

The Supreme Court has never reviewed a case involving electronic contracting, jurisdiction arising from online activities, cybersquatting or any other domain name-related dispute.

Aside from Doe v. Chao, a case involving standing to sue the federal government under the Privacy Act, the Supreme Court has never taken a case involving online privacy or security (GLB, COPPA, FTC Act, you name it). If you want to count Bartnicki v. Vopper, go ahead, though I don't think that obscure decision in any way undermines the point I am trying to make here.

So that covers that vast majority of what I consider to fall under the general heading of cyberlaw. None of it is even on the Supreme Court's radar. And I don't see that situation changing anytime soon. The Web is a welter of contracts (a state law issue), and all of the afore-mentioned statutes need many more years of intermediate appellate scrutiny before they'll make good candidates for Supreme Court review. Sure, there are plenty of prosecutorial and judicial missteps to feed our blogs. But, as the Supreme Court often reminds us (see Rule 10), the Supreme Court is not in the business of correcting erroneous applications of settled law.

What's left? Copyright, patent, and First Amendment law. The last (and only) time the high court decided a digital copyright case was Metro-Goldwyn-Mayer Studios Inc. v. Grokster, 545 U.S. 913 (2005), a case in which Justice Souter (whom Judge Sotomayor will replace) wrote for a unanimous court that Grokster, a distributor of peer-to-peer file-sharing software, was a secondary infringer of the movie studios' copyrights. Not only did Grokster lose the case, but it inspired the high court to create a new theory of secondary liability -- "inducing" copyright infringement -- along the way. Given the apparently entrenched views already on the court, Judge Sotomayor's ascent to the Supreme Court offers little hope of benefiting copyright fair use advocates anytime soon, if at all.

First Amendment issues have traditionally been a leading source of Supreme Court activity, and it is not too far-fetched to imagine high court review of a case involving a federal government (FCC?) attempt to impose broadcast-style regulation on Internet transmissions. Here alone, I think, we have an area where Judge Sotomayor could exert some influence on cyberlaw issues. Without question, the Internet would be a far different -- and worse -- place if Reno v. American Civil Liberties Union had come out the other way. On First Amendment issues, Judge Sotomayor appears to have a rather unremarkable though liberal-leaning view of the First Amendment. About the same as the departing Justice Souter. No gain or loss for free speech proponents.

That leaves patents. In re Bilski, No. 08-964 (certiorari petition filed Jan. 28, 2009), is an important case in which the Federal Circuit curtailed the patentability of software-implemented business methods. According to SCOTUSBlog, there is a good chance the Supreme Court will grant review of the Bilski decision. Bilski was up for discussion yesterday at the Supreme Court's private cert-consideration conference, so we could know as early as Monday if Judge Sotomayor will have that one facing her in the fall. I have no idea what Judge Sotomayor's views are on the patentability of software-implemented business method patents, and I don't think anyone else does either. The Inventive Step blog unearthed a couple district court decisions. Not much there to go on.

Feel free to e-mail me (as usual) all the cases I've missed!

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Judge Sotomayor Is First Nominee With Cyberlaw Record

President Obama's choice today for Associate Supreme Court Justice, Sonia Sotomayor, authored a handful of cyberlaw opinions while on the Second Circuit. All business disputes and a privacy case, but nothing (I hope) that could provide ammunition for the World's Greatest Deliberative Body.

About Judge Sotomayor I will venture this: If confirmed, she will be the first justice who has written cyberlaw-related opinions before joining the court. I looked just now and couldn't find where Chief Justice Roberts or Associate Justice Alito had written a cyberlaw opinion while serving as appellate judges. (Then-Judge Alito missed both ACLU v. Reno and Playboy Entertainment Group, Inc. v. United States, a pair of new media cases that were decided initially by special three-judge panels in the Third Circuit.)

I don't think any of the following means much as far was what Judge Sotomayor will do as an Associate Supreme Court Justice. I'm passing it along for conversational purposes only.

Judge Sotomayor wrote the court's 2002 opinion in Specht v. Netscape Communications Corp., an important online contracting case. In Specht, the Second Circuit declined to enforce contract terms that were available behind a hyperlink that could only be seen by scrolling down on a Web page. A “reasonably prudent” user would not have learned of the existence of the terms before responding to an invitation to download free software, Judge Sotomayor wrote.

Judge Sotomayor's opinion in Specht made the point that clicking a button may not be construed as an assent to a contract if the site did not make clear that the act of clicking would signify assent to the terms of a contract. Although a party may not normally argue that his failure to read the terms of a contract made it unenforceable, the court said that there is an exception to this rule “when the writing does not appear to be a contract and the terms are not called to the attention of the recipient.”

“We are not persuaded that a reasonably prudent offeree in these circumstances would have known of the existence of license terms,” Judge Sotomayor wrote. “Plaintiffs were responding to an offer that did not carry an immediately visible notice of the existence of license terms or require unambiguous manifestation of assent to those terms. ... [I]n circumstances such as these, where consumers are urged to download free software at the immediate click of a button, a reference to the existence of license terms on a submerged screen is not sufficient to place consumers on inquiry or constructive notice of those terms.”

Judge Sotomayor also wrote opinions in a pair of domain name cases, Storey v. Cello Holdings LLC in 2003 and Mattel Inc. v. barbie-club.com in 2002.

In Storey v. Cello, the Second Circuit held, per Judge Sotomayor, that an adverse outcome in an administrative proceeding under the Uniform Domain Name Dispute Resolution Policy did not have preclusive effect on a later-initiated federal suit brought under the Anticybersquatting Consumer Protection Act (ACPA).

In Mattel Inc. v. barbie-club.com, Judge Sotomayor authored an opinion holding that a federal court may obtain in rem jurisdiction over a domain name under the ACPA only in a district in which the domain name registrar or other domain-name authority is located. The ruling was based on a straightforward reading of the ACPA. However, at the time, some attorneys held the view that federal court jurisdiction could be created in any federal district merely by "depositing" written evidence of the domain registration with the trial court. Judge Sotomayor rejected that argument.

In Leventhal v. Knapek, No. 00-9306 (2d Cir. Sept. 26, 2000), a privacy case, Judge Sotomayor wrote for the Second Circuit that New York state agency officials and investigators did not violate a state employee's Fourth Amendment rights when they searched the contents of his office computer for evidence of unauthorized use of state equipment.

Finally, while on the federal district court bench, Judge Sotomayor took the first crack at Tasini v. New York Times, 972 F. Supp. 804 (S.D.N.Y. 1997), writing an opinion in a case involving freelance authors' rights to news articles that the New York Times digitized and resold in an electronic database. Judge Sotomayor's judgment in favor of the Times was later reversed by the Supreme Court.

Update: Notwithstanding this record, Judge Sotomayor will be joining a court where she will have very little opportunity to rule on cyberlaw issues.

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Fifth Circuit Faults Trial Court for Failure to Consider Typosquatter's Fair Use Defense

Make that 23 federal circuit cyberlaw cases so far this year. In last week's post Federal Circuits Heading Toward Busiest Cyberlaw Year Yet, I overlooked Southern Co. v. Dauben Inc., a Fifth Circuit case interpreting the Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d), and the duty of trial courts to carefully consider fair use and irreparable harm issues when ruling on a request for injunctive relief.

Yet Another Opportunity to Take a Whack at ICANN

The National Telecommunications and Information Administration published a notice of inquiry in the Federal Register this morning, seeking public comment on policy issues the government should consider as the Sept. 30, 2009, expiration date of the Joint Project Agreement between the government and the Internet Corporation for Assigned Names and Numbers approaches.

In theory, the expiration of the JPA would signal complete relinquishment of federal government control over the domain name management duties handled by ICANN.

ICANN's relationship with the federal government is spelled out in the 2006 Joint Project Agreement and the 1998 Memorandum of Understanding Between the U.S. Department of Commerce and the Internet Corporation for Assigned Names and Numbers. These documents spell out several lofty goals for ICANN to accomplish: long-term stability, competition for domain registration services, bottom-up policymaking, and representation of all stakeholders. If the government is convinced that ICANN has accomplished these goals, then (the story goes) it will declare the government-to-private-sector transition complete and hand over total responsibility for domain name management duties to ICANN.

This is really the wrong time for ICANN to be getting the keys to the car. ICANN has picked a nasty fight with trademark owners, an influential lobby, over plans to roll out new generic top-level domains. ICANN was singled out as a cause for concern in the Rockefeller/Snowe cybersecurity bill (S. 778) regarding domain name security issues. And the Obama administration is barely four months old, too young to make such a momentous decision. Add to this the constant online heckling that -- rightly or wrongly -- seems to follow ICANN around. It's easy to see the MOU/JPA continued for a few more years.

Take your best shot and send it to DNSTransition@ntia.doc.gov. Comments are due June 9.

Click Ads on GoDaddy Parked Pages Draw Cybersquatting Suit

Prof. Marc Randazza had a great post Is GoDaddy a Mass Cybersquatter? on his Legal Satyricon and, while it's great fun to muse about these things hypothetically, I think everyone agrees that live action is best. Now we have it in Ubid Inc. v. Godaddy Group Inc., No. 09-2123 (N.D. Ill., complaint filed April 6, 2009).

The plaintiff in Ubid v. GoDaddy owns trademark registrations for UBID, UBID.COM, AND REDTAG.COM. The plaintiff operates a merchandise auction site at ubid.com. For any reader that doesn't know, defendant GoDaddy is a domain name registrar, an ICANN-accredited company that fulfills domain name registration requests for a small fee.

According to the complaint, GoDaddy registered dozens of domain names that contain the plaintiff's trademarks (for example: ubidd.com, ubidauctionsales.com, ubid2save.com, ubid4.com, buyredtag.com etc etc). The plaintiff is not complaining about this part of GoDaddy's operation. However, in cases in which the domain name registrant does not transfer the registered domain to a domain name hosting service, GoDaddy will "park" the domain on its own servers. A domain name can be parked at GoDaddy anywhere from a day to an eternity. It all depends on what the registrant elects to do with the domain name.

GoDaddy places advertisements on parked pages, keeping whatever advertising revenue is generated for itself. Here is an example of a GoDaddy parked page. This is what the plaintiff is complaining about in the Ubid v. GoDaddy lawsuit. Every time somebody registers a variant of the plaintiff's trademark and then leaves the domain "parked" on GoDaddy's servers, GoDaddy monetizes that page by displaying advertising on it. GoDaddy -- not the registrant -- is thus engaging in cybrersquatting, according to the plaintiff's argument.

According to the complaint:

GoDaddy illegally achieves monetary gain by knowingly diverting internet traffic to said Deceptive Domains. The Deceptive Domains in this case are "parked pages" meaning that they display no substantive content and are used exclusively for the display of revenue generating Google AdWords advertisements. GoDaddy derives revenue each time an internet user is directed to the Deceptive Domains and ad advertisement is "clicked." GoDaddy has been deriving revenue from more than one hundred deceptive domains solely with the intent to profit from advertising on domain names that are confusingly similar to uBID's valuable marks.

The plaintiff's complaint alleges that GoDaddy is violating the Anticybersquatting Consumer Protection Act, 15 U.S.C. 1125(d), because it is "traffic[ing] in " or "us[ing]" a domain name that is identical or confusingly similar to the UBID or REDTAG marks. I hope this case gets at least to the summary judgment stage; it would be great to see how a court resolves this question. As far as I know, there is no ruling yet that squarely answers whether a domain name registrar does, or does not, have cybersquatting liability in this situation.

I have a couple impressionistic observations to make about this lawsuit:

First, the ACPA's authors did not see this one coming. The legislation, enacted in 1999, predates the Google advertising, domaining, and other ways to monetize Web pages.

Second, the ACPA contains liability limitations for domain name registrars, but they are limited and not clearly applicable to this case. Registrars are not liable to registrants for removing, transferring, disabling or cancelling a registration at the request of a trademark owner. Another part of the ACPA, also found within the Limitation on Liability section (codifed at 15 U.S.C. 1114), actually seems to support -- rather than defeat -- the plaintiff's claim: It reads:

A domain name registrar, registry, or other registration authority shall not be liable for damages under this section for the registration or maintenance of a domain name absent a showing of bad faith intent to profit from such registration or maintenance of the domain name.

The lawsuit would seem to turn on whether or not GoDaddy is acting in "bad faith." It could be liable as a cybersquatter if it used or trafficked in domain names similar to the plaintiff's marks -- if it did so in bad faith. Moreover, it is not entitled to claim the liability limitations in 15 U.S.C. 1114 if it acted in bad faith. "Bad faith" is defined according to an eight-factor test, which I won't go into here. As far as I can see, it doesn't cut clearly in favor or against GoDaddy.

Third, available statutory damages under the ACPA are between $1,000 and $100,000 per domain name, plus attorneys' fees and costs of suit -- amounts way higher than the revenue GoDaddy could possibly be making on the parked pages.

Fourth, a very long time ago, one court, in Bird v. Parsons, 127 F. Supp.2d 885 (S.D. Ohio 2000), wrote that "the Lockheed Martin decision and indeed 15 U.S.C. 1125(d)(1)(D) provides that a person shall be liable under the act for using a domain name only if that person is the domain name registrant." Lockheed Martin was a pre-ACPA case, involving a claim of contributory liability against a domain name registrar, and the court here is misreading/overstating the case (I think).

Fifth, I can't imagine how GoDaddy would cope with an adverse ruling, other than by removing the ads from its parked pages. Perhaps there are other ways to "park" a registered-but-not-yet-in-use domain.

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