Ken Kula: Welcome to Introduction to Cybersquatting: What The Heck Is It And How Do You Prevail At It, by Quimbee. My name is Ken Kula. Back when I became an attorney in 1993, there was no such thing as cybersquatting. In fact, when I tried my first case that involved cybersquatting in 2005, there was a dearth of controlling case law on the cause of action. That case was tried in the United States District Court for the District of Kansas and at the time, there was no reported Tenth Circuit case on cybersquatting.
Even as of today, Westlaw shows only five reported Tenth Circuit cases on cybersquatting and only two other Kansas-based cybersquatting cases reported in addition to the one I tried. Consequently, it is neither a well-known cause of action nor an often litigated issue.
This presentation strives to ensure all participants gain a general understanding of cybersquatting and explains what one must do to prevail on the cause of action. Something regrettably I failed to do back in 2006.
To accomplish these two goals, this presentation includes a number of course materials including today's slides complete with detailed presenter notes, current articles on cybersquatting, and five cases that address cybersquatting, including the case I tried nearly two decades ago.
You may follow along with those slides or simply sit back and enjoy our presentation on an introduction to cybersquatting. In the end, it will provide you with a unique overview on cybersquatting including an analysis of cases that address a cause of action that is rarely discussed in other CLE programs. The cases that will be discussed are the following:
1. Ideavillage Products Corp. versus Liuzhou Weimao Mobile Accessory Company, Number 20-CV-04997, 2021 Westlaw 3621788 out of the Southern District of New York and decided on August 16, 2021.
2. The second case we'll discuss is the Law Offices of Diana Mayer PC versus dianamayerlaw.com, Number CV-20-02235, a 2021 Westlaw 3565733 out of the District of Arizona, decided August 12, 2021.
3. The third case will be Allen v. Patton number 1:21-CV-3468, another 2021 Westlaw 3540420, again out of the Southern District of New York, decided August 11, 2021.
4. The fourth case we will talk about is Facebook, Inc. versus Namecheap, Inc., Number CV-20-00470, a 2021 Westlaw case 2865094, out of the District of Arizona decided July 8, 2021.
5. And of course, Sunlight Saunas, Inc. versus Sundance Sauna, Inc. reported at 427 F. Supp. 2d out of the District of Kansas and decided on April 17, 2006.
With that basic summary of what we are going to cover, let's get started with an introduction to cybersquatting and see what this thing actually is. The first thing I'd like to do is give you a brief review of the history and origins of cybersquatting. We'll rely on certain articles which you will be provided with as Exhibits 1, 2, and 3.
So first a short history of Cybersquatting law in Great Britain. This comes from Exhibit 1, so see it generally and then follow along.
In the beginning of the internet, there was the word or more accurately, there were two words and the words were domain name. It was, as the term implies, the name of the domain on the internet where a company's website resides or could be found, "When the Internet was young, domain name disputes were a new phenomenon. After all, never had there ever been something quite like cybersquatting." That comes from Exhibit 1 at page one. Cybersquatting was considered part of trademark law, "But trademark law could not adequately deal with cybersquatting."
First and foremost, cybersquatting was not your traditional trademark cause of action. It was part trademark, part trespass, with a dash of kidnapping and extortion thrown in. For you see, "Cybersquatting did not necessarily involve use of a trademark in commerce. For example, someone could register procterandgamble.com without permission of the famous multinational manufacturer of all kinds of products and just sit, or squat on it, without even attempting to use the domain name to sell anything, or to advertise anything, or do anything at all else with it, other than prevent the brand owner from registering it." That comes again from Exhibit 1 pages one through two.
Why would someone do that? The answer to that question is simple, money. Is merely registering another party's trademark in a domain name an act of infringement? The answer to that question is also fairly simple, no. Because there was no use or corresponding product being sold or offered for sale, which is the bedrock of traditional trademark law. One needs a product, one needs the use of the name or the trademark in commerce, and there has to be an association between the two.
To see how one court early on grappled with this new age phenomenon using old age law, we need to hop the pond to find one of the earliest known cybersquatting cases, "The 'one in a million case' as it was referred to involved a claim by British telecommunications, Marks & Spencer and others versus One In a Million Limited and was ultimately heard by the British Court of Appeals." That comes from Exhibit 1 at page two.
The defendants were described by that court as having, "Made a specialty of registering domain names for use on the internet comprising well-known names and trademarks without the consent of the person or company owning the goodwill in the name or trademark. Examples are the registration and subsequent offer for sale to Burger King by the second defendant of the domain name burgerking.co.uk for burgerking.commercial.unitedkingdom for £25,000." That again comes from Exhibit A.
After feeling compelled, remember this is 1998, to describe what the internet is namely, in the words of the court, "A collection of computers which are connected through the telephone network to communicate with each other." The court went on to explain that it predicted the internet's popularity would increase because apparently, "It is increasingly used by commercial organizations to promote themselves and their products and, in some cases, to buy and sell." Little did the British court know how far-reaching the internet would come over the next several decades.
Thereafter, the British Court of Appeals went through judicial gymnastics to find a wrong and perfect a right concluding, "Although the unauthorized registration of domain names by the defendants may not have been 'trademark infringement' per se because of the absence of use, the defendant's conduct nevertheless was tortious because it constituted 'passing off' a cause of action related to, but not the same as, trademark infringement." Refer to Exhibit 1 at three.
But how the court concluded the defendant's conduct was passing off would make the writers of Minority Report proud. The Minority Report was a movie back a decade or more ago where the government would foresee into the future that a crime was going to be committed, and then they would send someone into the future to prevent that crime from being committed. But I digress.
Returning back to the British court. In particular, the trial court judge stated, "In the case of Marks & Spencer, it is in my judgment beyond dispute that what is going on is calculated to infringe the plaintiff's rights in future. The name Marks & Spencer could not have been chosen for any other reason than that it was associated with the well-known retailing group. There is only one possible reason why anyone who is not part of the Marks & Spencer PLC Group would, or should, wish to use such a domain address, and that is to pass himself off as part of that group or his products off as theirs." That also comes from Exhibit 1.
I don't necessarily agree with that rationale because I believe that if there was a person with the last name Marks and a person with a last name Spencer got together and they wanted to sell some product in the future or had an intent to use that trademark, that it is fairly logical that maybe they would choose Marks & Spencer. But once again, I digress.
The defendant's counsel had already an apparently meritorious argument in response or so it would seem. They argued, "Just like non-use of a domain name could not possibly be considered 'infringement' mere registration and non-use of a domain name could not be considered passing off since there had been no 'passing on' nor could there have been without any use of the domain name itself."
"[French 00:14:04]." Or the British English equivalent, said the court. The court explained that "The 'passing off' i.e., the misrepresentation occurred not as a result of use of the domain name, since that had never occurred, but rather from the mere recording of the defendant's names in the associated WHOIS Directory." That can be found at Exhibit 1 at page four.
Just think of that, the mere recording of the defendant's names in the associated WHOIS Directory was going to be the linchpin for passing off and thus finding the individual registering Marks & Spencer liable for cybersquatting, or what would become known as cybersquatting. Very far reaching and, in my opinion, very farfetched.
But continuing, the British court judges then performed a perfect 10.0 dismount to complete their awe inspiring judicial gymnastics by, "Even fashioning a way of considering the unauthorized registration of domain names by the defendants to be considered trademark infringement of sorts since the domain name registrations were 'instruments of fraud' and a 'threat' of infringement was present since the whole purpose of the confusingly similar two trademark's registrations was to sell the domain names and moreover, wait for it, wait for it, the defendants would use the domain names in their trade as dealers." That also comes from Exhibit 1.
Just think of that, they're talking about the threat of infringement in the future and the possibility of using the domain names in the future as trades as dealers. Again, I believe it's a lot of speculation on the part of the British court, but they were trying to do justice and fashion a remedy based upon a new set of circumstances that they had not encountered previously. Continuing, as you can clearly see, the courts in Britain were clearly not prepared to handle cybersquatting in the 1997 to 1998 timeframe.
Next, we'll look to see how a U.S. court handled one of the earliest cases of cybersquatting on this side of the pond. To get to that, we will go to Exhibit 2 and talk about the origins of cybersquatting in the United States.
One of the earliest judicial references to cybersquatting in the U.S. courts is a 1998 opinion out of the United States District Court for the Central District of California. See generally Exhibit 2 that discusses this case.
The case is Avery Dennison Corp. versus Jerry Sumpton. The opinion from the Ninth Circuit denying the petition for re-hearing can be found at 1999 Westlaw 33644480. Now the case was decided before the institution of the Uniform Domain Name Dispute Resolution Policy, or UDRP, which will be discussed briefly in relation to other cases analyzed later in this presentation.
The Avery case, "Involved a dispute over the domain names, avery.net and dennison.net, which were identical to two trademarks owned by the plaintiff." Refer to Exhibit 2 at page two. As indicated, the case involves one of the first known uses of the term, "Cybersquatting." Or at least a derivative thereof. When Judge Letts, L-E-T-T-S, Judge Letts stated the following in one of his opinions, "Defendants are 'cybersquatters' as that term has come to be commonly understood. They have registered over 12,000 internet domain names, not for their own use, but rather to prevent others from using those names without dependence consent. Like all cybersquatters, defendants merely squat on their registered domain names until someone else comes along who wishes to use them. Like all cybersquatters, defendants usurp all of the accepted meanings of their domain names so as to prevent others from using the same domain names in any of their accepted meanings. And like all cybersquatters, defendants seek to make a financial return by exacting a price before consenting to allow others to use the domain names on which they have chosen to squat." Refer to Exhibit 2 at page three.
Shortly after the Avery case, the case of Sporty's Farm LLC versus Sportsman's Market, Inc. arose. Its appellate opinion is reported at 202 F.3d 489, it's the Second Circuit case decided in the year 2000. And it is in there that Circuit Judge Calabresi, writing for the court, is believed to be the first Judge to use the term cybersquatting in a written court opinion.
In particular, His Honor stated, "Due to the lack of any regulatory control over domain name registration, an internet phenomenon known as cybersquatting has become increasingly common in recent years. Cybersquatting involves the registration as domain names of well-known trademarks by non-trademark holders who then try to sell the names back to the trademark owners. Since domain name registrars do not check to see whether domain name request is related to existing trademarks, it has been simple and inexpensive for any person to register as domain names the marks of established companies. This prevents use of the domain name by the mark owners who, not infrequently, have been willing to pay ransom in order to get their names back." This comes from Sporty's Farm, LLC, 202 F.3d at 493.
Now the court prefaced that statement by indicating that the, "Case originally involved the application of the Federal Trademark Dilution Act, or the FTDA, to the internet. But during its appeal, "The Anti-Cybersquatting Consumer Protection Act, or ACPA, was passed and signed into law." And that can also be found in Exhibit 2. The court explained that this new law, the ACPA, governed the case before it.
We will now turn our attention to a quick review of the ACPA, or Anti-Cybersquatting Consumer Protection Act, before turning to some recent, and one not so recent, cases that were decided under the ACPA. So let's review quickly Cybersquatting Consumer Protection Act.
As explained, "Cybersquatting is registering, selling, or using a domain name with the intent of profiting from the goodwill of someone else's trademark. It generally refers to the practice of buying up domain names that use the names of existing businesses with the intent to sell the names for a profit to those businesses." And that comes from Exhibit 3 at page one.
Now in the early years various big name companies, including Panasonic, Fry's Electronics, Hertz, and Avon were among the victims of cybersquatters. Refer to Exhibit 3, page one. To provide a solution to this problem, the ACPA was enacted on November 18, 1999, but it is not the only possible avenue to reach a solution.
In particular, when one is confronted with cybersquatting in the United States, he or she has two options. The entity can sue under the ACPA or it can, "Use an international arbitration system created by the Internet Corporation of Assigned Names and Numbers, abbreviated ICANN, I-C-A-N-N." This comes from Exhibit 3, at page two.
Since the latter, the ICANN avenue, does not require an attorney and the former, the ACPA, is the subject of this presentation, we will only discuss suing under the Anti-Cybersquatting Consumer Protection Act or ACPA.
So turning to it, the ACPA, "Authorizes a trademark owner to sue an alleged cybersquatter in federal court and obtain a court order transferring the domain name back to the trademark owner." Exhibit 3. Again, it's important to know that we're talking about transferring the name back to the trademark owner which was registered by someone other than the trademark owner. To prevail, the plaintiff, who is the trademark owner, must prove the following: one, the domain name registrant had a bad faith intent to profit from the trademark. two, the trademark was distinctive at the time the domain name was first registered. And three, the domain name is identical, or confusingly similar, to the trademark. And finally four, the trademark qualifies for protection under federal trademark laws. That is the trademark is distinctive and its owner was the first to use the trademark in commerce. That also comes from Exhibit 3.
Now to review that quickly. One, the first element is the domain name registered had a bad faith intent to profit from the trademark. Two, and this was probably one of the more important elements, is the trademark was distinctive at the time the domain name was first registered. So, therefore, if someone registered something as Google back in the early 2000s and it was before Google came into existence, and then Google came into existence, they wouldn't be necessarily a liable cybersquatter since they had registered a name that was not already distinctive at the time the domain name was first registered. But you would also have to have a very, very coincidental and lucky streak in you to be able to name a trademark as Google, or Exxon, or Xerox, or other things that are arbitrary or fanciful.
Continuing. If the defendant cybersquatter can demonstrate that the British judge was wrong and that there was a legitimate reason to register the domain name at issue other than to simply sell it back to the trademark owner, my Marks & Spencer example, then the defendant may be able to maintain the domain name in its name. With that brief overview of the ACPA, let us now turn our attention to specific cases that have addressed cybersquatting. This will consist and comprise the second half of this one hour long CLE on cybersquatting.
So let's now turn to an analysis of cases addressing cybersquatting. We have approximately five cases, some of them will take longer than others to go through, but we will complete the presentation with going over in a little bit more detail the Sunlight Saunas versus Sundance Sauna case from 2006.
But first let's turn to a case that discusses the easy path to success, a finding of bad faith. For that we go to Ideavillage Products Corp. versus Liuzhou Weimao Mobile Accessory Company. This is the 2021 Westlaw case out of the Southern District New York, 3621788.
And this was a memorandum and opinion by the Chief United States District Judge Laura Taylor Swain. And we direct your attention to page three of that opinion where they talk about cybersquatting. And the court indicates that the plaintiff's assert a claim of cybersquatting arising from defendant's domain name copperfitonlineship.com. And this is copperfitonlineship.com all one word.
And the court explains that to succeed on a cybersquatting claim under 15 U.S.C. § 1125 D1A, which is part of the Lanham Act, a plaintiff must show that one, its trademark is either distinctive or famous. Two, the domain name is identical or confusingly similar to the trademark. And three, the defendant acted with a bad faith intent to profit from the trademark. You'll see that there the elements are expressed as three elements where previously we had broken them up into four elements, but all the actual contents of the elements are in there.
So the court went over where plaintiffs is copper fit marks are suggestive, not arbitrary or fanciful, because the marks identify the copper material used in the products, and the product's compression function, but do not directly describe what the product is or what it is used for.
So they indicated that the copper fit marks are inherently distinctive because they were suggestive with a established secondary meaning. The court went on to indicate that it finds that defendant's domain name, copperfitonlineshop.com, is confusingly similar to plaintiff's registered mark Copper Fit marks, and defendant's domain name contains plaintiff's trademark, and the addition of online and shop do not indicate a separation from the mark.
And so although the marks were not identical, the court found them confusingly similar because the registered trademark was consumed within the domain name. And the court went on to conclude that the evidence before it demonstrates that the defendants acted in bad faith when they registered the domain name copperfitonlineshop, and it pointed out that the Lanham Act contains a non-exclusive list of factors to consider in determining bad faith, one of which is usage of the trademark in the domain name. And the court basically glommed on to that bad faith finding that they used the trademark in the domain name to find bad faith, and that pretty much sealed the deal for this case.
And so the court went on to find that defendants acted in bad faith by including the registered mark in the domain name, using the website as an instrument to infringe on plaintiff's registered trademarks and copyrights, and selling goods bearing the counterfeit marks in commerce. And so, obviously, there was a lot of evidence of bad faith which pretty much propelled this case to a plaintiff's conclusion and victory.
And the court held that accordingly, plaintiffs are entitled to default judgment on their cybersquatting claim. And that is again, because the court found that the trademark was included in the domain name, that the defendant was using a website as an instrument to infringe on the registered marks, and they were selling goods bearing the counterfeit marks in commerce, all of which does not bode well for the defendant. So that's the first case just to show what the elements are and how easy it is to obtain a judgment if you can prove true and egregious bad faith.
Now the second case that we want to look at is the Law Offices of Diana Mayer, PC versus dianaayerlaw.com. It comes from the District of Arizona and can be found at 2021 Westlaw 3565733. And this case is important because it proves that you don't need to know who the cybersquatter is to prevail. Typically, in cases you have to know who your defendant is for you to actually prevail.
But this case was decided by the United States District Judge Michael Liberty and it was decided on August 12, 2021. And the court went into a discussion where Mayer contends that in rem personal jurisdiction exists over defendant domain name. It relies on the ACPA section that states in relevant part, "The owner of a mark may file an in rem civil action against a domain name." If the court finds the owner, "Through due diligence was not able to find a person who would have been a defendant in a civil action."
So here we're talking about bringing an action actually against the domain name, not against the person that registered the domain name. And the court went on to show that the plaintiff did establish due diligence by reaching out to godaddy.com and trying to determine who owned the domain name. And the plaintiff contend that no United States court has jurisdiction over the registering of the disputed domain as it believed that the said registrant is located in Indonesia.
So here not only could the plaintiff not find the actual domain name registrant, but they had evidence that the domain name registrant was located in Indonesia where the court wouldn't have jurisdiction. And so the court found that these allegations met the statutory requirements to show that in rem, not in person, but in rem jurisdiction is appropriate.
The court, now finding that jurisdiction was appropriate, turned to the question of venue and it indicated that venue is also proper in this District of Arizona as the plaintiff alleges, pursuant again to the Lanham Act, 15 U.S. Code § 1125 D2a, which that section allows for an in rem action to be filed against, "A domain name in the judicial district in which the domain name registrar, domain name registry, or other domain name authority that registered or assigned the domain name is located."
So again, we don't need to know who registered it, we don't need to know where that registrant is as long as we know where the domain name authority that registered or assigned the domain name is located. And here the plaintiff alleged, accurately, that GoDaddy is the registrar of defendant's domain name and is located in the District of Arizona, so the court found that venue was also proper.
And then finally the court turned to service, which is always a tricky thing, but the court pointed out that the plaintiff contends that service was proper, again under the Lanham Act, Section 15 U.S. Code § 1125 D2a22. There the ACPA provides that service of process in an in rem action, like this one, may be accomplished by sending notice of the alleged violation and intent to proceed under the ACPA to the registrant of the domain name.
So therefore by sending copies of the documents to the defendant which is, again the domain name not a person, via godaddy.com by mail and email, the plaintiff satisfied the service requirement. So jurisdiction was proper, venue was proper, and venue was proper. And this case points out that it's a different type of case when you're dealing with an actual in rem proceeding where you only have to prove where the domain name was registered. You don't have to prove who registered it or where that person is.
The court then went on and discussed that the ACPA provides a remedy for cybersquatting when, "A person other than the trademark holder registers the domain name of a well-known trademark and then attempts to profit from this by either ransoming the domain name back to the trademark holder or by using the domain name to divert business from the trademark holder to the domain name holder." Cited a Ninth Circuit case about that.
The court then went on to provide the elements of cybersquatting, which we've already discussed three elements, and then the court indicated that here Mayer does not seek, the plaintiff does not seek monetary damages rather it, "Seeks the recovery of the domain name, dianamayerlaw.com." Which we touched on earlier which indicated that if a plaintiff prevails in a cybersquatting action, they can simply get the domain name registered back to them and taken away from the domain name registrant.
Thus, the factor weighs in favor of the entry. In this case, it was default judgment since the person in Indonesia never showed up. And finally, the court concluded that after reviewing all the factors that it had to review, the court finds that the plaintiff was entitled to default judgment against defendant domain name again, because it wasn't a person. And because the plaintiff does not seek money damages, the court will require GoDaddy to the necessary steps to have Mayer listed as the registrant of the domain name at issue.
So that's an interesting case to show how you can prevail even when you don't know who registered it, where they are, or anything like that. Especially when you're not seeking money damages and you're just seeking to get the domain name registered back into your name.
Now we're going to move on to Allen v. Patent, a Southern District of New York case decided also in August 2021. It can be found at 2021 Westlaw 3540420. And it's an interesting case because even though cybersquatting is a new phenomenon, it still must adhere to the non-frivolous standard, and we see in this case that Mr. Allen did not actually adhere to that.
So this was, again, we encounter Chief United States District Judge Laura Taylor Swain earlier and she actually decided this case also. And because we're talking about a frivolous case, it is not necessarily surprising that the plaintiff is proceeding pro se.
So Mr. Kent A. Allen is the plaintiff and he is appearing pro se, and he asserts claims for alleged appropriation of his ideas for Google and Instagram and claims, based on allegations, that he developed numerous internet domain names including Google, Vizio, Postmates, Kangaroo and Amazon.
He claimed that he did this many, many years before Google and those other entities came into existence when he was a child. Unfortunately, he doesn't have a lot of evidence to substantiate this and as the court indicates, he has made a number of these similar claims against many other famous trademark owners.
And the court indicated that the court must dismiss a complaint or any portion of the complaint that is frivolous or malicious, fails to state a claim on which relief may be granted, or seeks monetary relief from a defendant who is immune from such relief even if the case is filed in forma pauperis.
And the court went on that after separating legal conclusions from well pleaded factual allegations, the court must determine whether those facts by Mr. Allen make it plausible, not merely possible, but plausible that the pleader is entitled to relief.
The court went on to say that the court construed the plaintiff's allegations that he was deprived of the ability to profit from registration of various well-known domain names, including as I indicated Google, Vizio, Postmates, Kangaroo and Amazon and he was seeking relief against them for cybersquatting.
Court went on to talk about whether there was any merit to his claims and indicated that a claim is frivolous when either one, the factual contentions are clearly baseless, such as when allegations are the product of delusion or fantasy, or the claim is based on an indisputably meritless legal theory. When the court brings up delusions and fantasy as in reference to your claim, that is not a good sign.
The court went on that after reviewing plaintiff's complaint, finds that it lacks any arguable basis in law or in fact. The court went on to say that plaintiff's claims that as an eight or nine year old child, he had the ideas of Google and Instagram are baseless, particularly in light of claims plaintiff has advanced in his other actions, thus the court also dismisses the complaint as frivolous.
So this individual had a tendency to sue well-known companies and indicate that back 20, 30 years ago when he was eight or nine years old, he came up with these ideas and they are preventing him from registering them because they've usurped upon his ideas of trademarks. Again, this is just a case that shows that cybersquatting is still a cause of action that must adhere to the non-frivolous standard.
The next case that we're going to look at briefly is an interesting one based upon the recent COVID pandemic and cybersquatting in relation thereto. It is Facebook, Inc. versus Namecheap, Inc., it is also out of the District of Arizona, it was decided in July of 2021 and it shows that cybersquatting can be the prelude to cybercrime. So let's turn to the Facebook case.
And here we actually have a number of attorneys that were representing the various entities and this was decided by Chief United States District Judge G. Murray Snow. And so Namecheap is an internet corporation of assigned names and numbers, ICANN, we talked about that earlier, accredited domain registrar. In offering its customers domain name registry services, Namecheap allows its customers to opt into defendant, WhoisGuard's, proxy service. And the plaintiff's alleged that defendants have registered, trafficked in, or used domains, these are the infringing domain names, that are identical or confusingly similar to trademarks and service marks in which they own the exclusive rights. So therefore, we're talking about cybersquatting and we're talking about the ICANN.
So the court went over the various legal standards for the motion to dismiss, because that was the procedural posture of this case, went over some alter ego liability law and then it got to the cybercrime allegations. And this can be found at a *3 of the Westlaw opinion and the court lets the reader know that the first amendment complaint includes the following allegations: One, domain names used in a 2018 ransomware scam were primarily registered through Namecheap. That's the first allegation. Two, defendants facilitated a, "Predatory wire fraud scheme exploiting the COVID-19 pandemic." Through a domain name that WhoisGuard registered and licensed. And again, as we just discussed, Namecheap and WhoisGuard are in, for lack of better words, cahoots in this case. Three, Namecheap is the, "Registrar of choice for cyber criminals." That's an allegation in the First Amendment complaint. And lastly allegation four is that defendants facilitate the shielding of cybercrime and intentionally attract cyber squatters to use its services.
So this is an interesting case because, not only does it have the newness of the COVID-19 pandemic, but it also talks about the intertwining of cybercrime and cybersquatting. Cybersquatting is not, as we've seen, a crime it's a civil action. And as we've also seen, it doesn't necessarily have to be against a person, it can be against property, the domain name itself. But here we're talking about the combination of cybersquatting and cybercrime.
And as I alluded to earlier, the plaintiff's alleged violations of the Anti-Cybersquatting Consumer Protection Act, the ACPA which we've talked about, the court went on to indicate to state a claim of cybersquatting under the ACPA, the plaintiff must establish, among other requirements, that defendants had a bad faith intent to profit from the mark. This hearkens back to the first case where we looked at where if you have an indication or overwhelming evidence of bad faith, that it's more likely than not that you are going to have a ruling against you if you are the cybersquatter.
So again, this was an interesting case because it intertwined cybercrime with cybersquatting where cybersquatting, as I indicated, is a civil action and doesn't even necessarily need a person involved to get a verdict.
So with that, let's turn to the last case that I want to discuss. And this is possibly the first cybersquatting trial ever conducted in Kansas. It is Sunlight Saunas, Inc. versus Sundance Sauna, Inc., it is found at 427 F.Supp.2d and it comes from the District of Kansas and was decided way back on April 17, 2006.
And in this case, this was decided by Judge Vratil and she held a number of things in coming up to the trial, but this in particular is with regards to summary judgment that was filed by both sides with regards to, among other things, the cybersquatting claim.
And so Her Honor went over the factual basis of the case which was ... And I'm not reading this from the opinion, this is more just from my memory. There was a husband and wife who had a desire to have a sauna company. And the wife had a brother who was very artistically inclined but not so much business inclined, so he was the creative force behind things.
The husband and wife, and the brother, or brother-in-law, brought in a third party individual when they were first starting off their sauna company. And depending on who you believe, the third party indicated that he was promised to be a part owner, the owners indicated they promised to give him certain stock options in the company. But eventually there was a falling out between the parties, the one side being the husband, wife, and brother, brother-in-law and / the third party individual.
Well the third party individual, he got quite upset and he came into work one day and took his computer and then left. And lo and behold, he went out to California, started a competing sauna company; hence, Sundance Sauna. And with the benefit of the computer that he took from Sunlight Sauna, was able to know a number of customers, potential customers, and past customers of Sunlight Saunas.
And he set up or had set up websites, Sunlight Saunas Exposed, where people would go to that website, and they would know who went to that website, and not only would that individual going to that website see information that was not flattering to Sunlight Saunas, but they would then immediately be called by Sundance Saunas and try and get those people to purchase products from Sundance Saunas instead of Sunlight Saunas, or simply prevent them from buying from Sunlight Saunas.
And so turning to page 1064 of the opinion, this is 32 pages in so it's a rather lengthy opinion, Judge Vratil talks about cybersquatting under the Lanham Act, and she indicates that Sunlight claims that defendants, and there was a number of defendants because this individual had two sauna companies, Sundance Sauna and Brighton Sauna, and also he went into cahoots with a couple of other sauna companies. Softwell I believe was the name of one, I don't remember the other one.
And so Sunlight was claiming that the defendants used its trade name and mark, which would be Sunlight Saunas, in the domain name, sunlightsaunasexposed.com in violation of the Lanham Act and Anti-Cybersquatting Consumer Protection Act. And the defendants argued on the contrary that they were entitled to summary judgment because such use was a legitimate fair use that could not cause confusion.
The court went over the ACPA and indicated what was required. We've already gone over that, bad faith, distinctive mark, all that kind of stuff. And then the court went through each individual element in some detail, and so I direct you to the opinion to look at that.
Regarding confusing similarity, defendants contended that as a matter of law, the domain name www.sunlightsaunasexposed.com was not confusing and similar to plaintiff's mark, Sunlight Saunas, because the domain name constituted a clear anti message which alerted any user that the website was critical of plaintiff.
We disagreed and we still indicated that there was confusing similarities because of the use of Sunlight Saunas, and the court specifically noted that defendant's use of plaintiff's mark occurred in the context of consumer criticism and that defendants did not actually use the mark in the domain name, and that defendants stated the plaintiff was not authorized the website. And so, ultimately, the court found that there was enough of evidence of confusing similarity that the court could not conclude as a matter of law that confusing similarity was absent, so that got over the first hurdle.
The second hurdle was bad faith and defendants argued that as matter law, plaintiffs cannot establish bad faith. They argued specifically defendants contend they did not act in bad faith and that their use of plaintiff's mark constituted a bonafide non-commercial or fair use in that they used the website as a gripe site for critical commentary protected by the First Amendment. The court rejected defendant's First Amendment argument, and then went through the list of the nine factors to determine if there was bad faith.
And after going through the nine factors, the court concluded that based on plaintiff's evidence on a number of the factors, a reasonable jury could find that defendants acted in bad faith, and so the defendants were not entitled to summary judgment on that.
The court then went on to indicate that the defendants weren't able to establish that summary judgment was warranted to go in their favor, and so the case went to trial on the anti-cybersquatting claim. And in this case, we were not trying to get the domain name, Sunlight Saunas Exposed, re-registered to us we were actually seeking monetary damages.
And at trial, among many other claims, the jury found that there was not enough evidence of the actual harm and intent to cause harm to find that the cybersquatting statute was breached. And so unfortunately, this case resulted in a finding of no violation of the Anti-Cybersquatting Consumer Protection Act. I think the jury made a mistake, but obviously it survived summary judgment. But then again, the jury was able to review all the evidence and it concluded that there was not a violation of the Anti-Cybersquatting Consumer Protection Act. So I would highly recommend that you take a look at that case in full because it deals with the cybersquatting in detail, along with the other things.
And so this concludes our hour long presentation entitled Introduction to Cybersquatting from Quimbee. I hope it has provided you with the background you will need to handle this niche area of the law, that is bringing an action under the Anti-Cybersquatting Consumer Protection Act.
I hope it has also provided you with some insights into the origins and history of this atypical area of trademark law that you may not otherwise get. If you have any questions or would like additional information, please do not hesitate to contact me at ken.[email protected]. Thank you very much and have a wonderful day.