Direct Niche, LLC v. Via Varejo S/A

Via Varejo S/A (defendant) was a Brazilian corporation and parent company to Casas Bahia, a multibillion-dollar retail brand with brick-and-mortar stores around the world and online operations. Via Varejo did not operate any physical stores in the United States or ship its products to the United States, but millions of internet users located in the United States accessed its Brazilian website each year. In addition to selling products to customers, Via Varejo made money through its website from advertisers, including ads purchased by major United States companies like Intel, Microsoft, and Dell. Via Varejo contracted with these companies to place their products for sale on its website in preferred locations as well as in banner advertisements. Direct Niche LLC (plaintiff) was a United States company that bought and sold domain names. Direct Niche bought the domain name casasbahia.com at an auction and began using it to make money through paid advertisements. Via Varejo filed a complaint with the World Intellectual Property Organization (WIPO) challenging Direct Niche’s use of the domain, and WIPO issued a ruling ordering Direct Niche to transfer the domain to Via Varejo. Rather than doing so, Direct Niche filed a lawsuit against Via Varejo in the United States, seeking a declaratory judgment that Direct Niche’s use and registration of casasbahia.com was not unlawful under the Anticybersquatting Consumer Protection Act (ACPA), which was intended to prevent the purchase of Internet domain names with a bad-faith intent to profit on a trademark holder’s goodwill. After a bench trial, the district court found that Via Varejo had appropriated ownership rights in the United States because it used the Casas Bahia trademark in commerce to provide advertising services for others and that Direct Niche had misappropriated Via Varejo’s ownership rights in violation of the ACPA. Direct Niche appealed, arguing that Via Varejo had not appropriated the Casas Bahia mark in the United States because it did not have a registered trademark there or sell products directly to or within the United States.