Thursday, December 27, 2007

“Reverse Cybersquatting” – the dark side of the Anticybersquatting Consumer Protection Act


In a previous posting (link here), I wrote about a flurry of trademark infringement lawsuits filed by 3700 Associates, LLC (“3700 Associates”) – the developer of the Cosmopolitan Resort & Casino in Las Vegas – against various named defendants. Based on the named defendants in one of the complaints, 3700 Associates appeared to be going after domain registrants buying up domain names that were similar to its THE COSMOPOLITAN RESORT & CASINO mark for which it has two recently received registrations (word mark and stylized mark covering real estate services featuring condominiums) as well as two pending applications (word mark and stylized mark covering vacation time shares, casino services, and resort hotels).

One of the complaints, however, was against Florida resident Tim Griffin, Sr. and his company, Griffin IT Media, Inc. (“Griffin”) See 3700 Associates, LLC v. Griffin et al, Case No 2:2007cv01453 (D. Nev. Filed October 31, 2007). A copy of the complaint can be downloaded here.

Griffin owns the domain name http://www.cosmopolitanhotel.com/. The complaint alleges cybersquatting, unfair competition, and common law trademark infringement. The complaint carefully omits to mention the specific date when Griffin registered the domain name – only that he did register it and that the domain name links to a website with multiple click-through links.

On November 12, 2007, Griffin filed a Motion to Dismiss the case on grounds of lack of jurisdiction because neither Griffin nor his company has any ties to Nevada. A copy of the motion can be downloaded here. However, the motion’s memorandum of points and authorities also contains a scathing introduction that transforms what first looked like your typical “cybersquatting” dispute into an example of what has come to be known as “reverse cybersquatting.”

“Reverse cybersquatting” (also sometimes called reverse domain name hijacking) is when a trademark owner who wants to obtain a particular domain name files a lawsuit under the Anticybersquatting Consumer Protection Act (“ACPA”) against the domain name owner who acquired the domain name legitimately (either before the trademark owner’s mark became famous or distinctive or because of some other legitimate interest in the domain name) in order exert pressure against such owner to turn over the domain name to the trademark owner.

Whereas “cybersquatters” are ridiculed for registering domain names that contain another party’s distinctive or famous trademarks, “reverse cybersquatters” are chastised for abusing the ACPA to force innocent domain name holders into turning over domain names that were legitimately acquired simply because the domain names in question happen to contain (or are confusingly similar to) such party’s trademarks even though the domain names were registered long before the trademark in question became distinctive or famous.

According to Griffin, he registered the domain name on August 15, 2003 – long before the November 24, 2004 date that 3700 Associates announced the name of its property. If this is the case, then 3700 Associates will be hard pressed to maintain a cybersquatting action against Griffin. The plain language of Section 43(d) of the Lanham Act (15 USC §1125(d)), holds a registrant liable if the registrant (i) registers, traffics in, or uses a domain name that a) is identical or confusingly similar to a distinctive mark which is distinctive at the time of registration of the domain name or b) is identical or confusingly similar to or dilutive of a famous mark which is famous at the time of registration of the domain name and (ii) has a bad faith intent to profit from that trademark, including a personal name, which is protected as a trademark under Section 43 of the Lanham Act. See 15 U.S.C. § 1125(d)(1)(A).

How can 3700 Associates possibly maintain that its mark was either distinctive or famous at the time Griffin registered the domain name when it had not even announced its intention to use the mark at the time?

In its Response to Griffin’s Motion to Dismiss (a copy of which can be downloaded here), 3700 Associates attempts to characterize Griffin’s business model of buying and selling domain names as nefarious:
Upon information and belief, Defendants derive click-through revenue from advertising and links posted on websites linked to their domain names, as well as through the sale of domain names. In fact, as demonstrated below, Defendants collectively own over 18,000 domain names and seek to offer them to the highest
bidder. It would be surprising if Defendants owned any trademark rights in any of the domain names that they register and sell. Rather, it appears based upon Plaintiff’s initial research that Defendants’ modus operandi is to register any domain that is available and squat on it until an actual trademark owner comes knocking.
Response at 2. So, under 3700 Associates’ logic, domain name registrants should not be allowed to register domain names using words that are not currently trademarks, but which later, long after the domain was registered, become trademarks.

3700 Associates does acknowledge in its Response that Griffin registered the cosmopolitanresort.com domain name a little more than a year before 3700 Associates announced its “The Cosmopolitan Resort & Casino” project. Nonetheless, 3700 Associates argues that once it had acquired trademark rights in the COSMOPOLITAN Marks, Griffin began to create click-through links which diverted consumers to direct competitors of 3700 Associates. Id. While this may be true and may even constitute unfair competition under federal and state law, it is not cybersquatting under §43(d).

In order to maintain its position that Griffin’s conduct constitutes cybersquatting, 3700 Associates appears to be taking a much more expansive view of the ACPA:

[T]he ACPA is intended to apply to any person who “has a bad faith intent to profit” from a mark and “registers, traffics in, or uses a domain name.” See 15 U.S.C. § 1125(d)(1)(A). As Plaintiff sets forth in its Complaint and pending Motion for Preliminary Injunction, Defendants were and are attempting to harm Plaintiff’s goodwill by using the domain name to divert consumers from Plaintiff’s website to various other Las Vegas-oriented websites offering services in direct competition with Plaintiff.
Response at 3 (emphasis in original). 3700 Associates seems to be overlooking an important part of the ACPA, namely the part about “at the time of registration of the domain name.”

Griffin’s Motion noted that 3700 Associates had filed actions against other defendants with domain name registrations incorporating the word “cosmopolitan.” The defendants in those cases apparently did not retain counsel and 3700 Associates have supposedly taken control of those domain names. While Griffin attempts to characterize 3700 Associates’ actions against these other defendants as “reverse domain name hijacking,” I strongly suspect that the defendants in those other cases are not retaining counsel because they do not have the same supportive facts as Griffin. Most of those domain names were likely registered after 3700 Associates made its announcement, which makes those defendants likely guilty of “cybersquatting.”

Mr. Griffin’s case is more the exception rather than the rule – an enterprising individual who had the foresight to stake out valuable domain names (like real estate) and register those domain names with the hope that they would one day become valuable online property. 3700 Associates now wants to characterize such enterprising foresight as cybersquatting. One man’s “modus operandi” is another man’s “business model” – 3700 Associates can cast Griffin’s ownership of the cosmopolitanhotel.com domain name however it wants, but cybersquatting under §43(d) of the Lanham Act it is not.

After a hearing on Griffin’s Motion, the court granted Griffin’s motion to dismiss for lack of jurisdiction. It will be interesting to see if 3700 Associates decides to continue to pursue the case in Florida or whether Griffin decides to pursue Rule 11 sanctions against 3700 Associates.

I don’t know for how much Griffin is willing to sell the cosmopolitanresort.com domain name, but I would think at this stage, it would be cheaper for 3700 Associates to buy it from Griffin rather than to continue to litigate over it.


1 comment:

Dave Zan said...

Indeed, they could've followed examples from Apple and Microsoft when they acquired iPhone and Zune respectively. But...apparently someone saw fit to accuse the registrant of wrongdoing merely because they're doing what they didn't expect, much more like.

I foresee more disputes of this nature in 2008 as more people get savvy somehow and see this sort of thing happening.