AirFX,LLC
(“Defendant”), the owner of the trademark AirFX,
suffered a defeat last week in its attempt to “acquire” (or as some might say
“hijack”) the domain name www.airfx.com from its current registrant, Marc Lurie
(“Lurie” or “Plaintiff” ). [Note: There were many articles about this
dispute last year when the court denied Defendant’s Motion to Dismiss – see here, here, here,
and here
for a small sampling].
The
airfx.com domain name was originally registered by Bestinfo on March 21, 2003. In June 2005, Air Systems Engineering, Inc.
("ASE") filed a trademark registration application for the mark AirFX
for “motorcycles, vehicle parts, namely, shock absorbers, and suspension
systems for motorcycles, bicycles, automobiles, and powered vehicles.” The mark registered in March 2007. In April 2011, ASE assigned its trademark
rights to a wholly owned subsidiary, Defendant AirFX,LLC.
Lurie
originally was involved in operating skydiving wind tunnel businesses under the
name "SkyVenture," but later decided to use the name AIRFX in
connection with a new line of wind tunnels (despite having found ASE’s
application to register AIRFX after conducting a trademark search). Lurie acquired the airfx.com from Bestinfo
for $2,100 on February 2, 2007, but never posted any content or created a
website – and instead has a typical landing page (or “splash page” as defined
in the opinion) put up by the registrar, GoDaddy.com. While the landing page does have links to
third party advertisements, Lurie maintained that he drived no revenue from
such advertisements (and Defendant never provided any evidence to the
contrary). After leaving SkyVenture,
Lurie was bound by a non-compete agreement prohibiting him from developing his
own line of wind tunnels until 2010.
However, Lurie never sold any product under the brand AIRFX nor
conducted any advertising, marketing, or manufacturing activities. Lurie also never sold or offered to sell suspension
systems for motorcycles, or any other motorcycle-related products.
Defendant
contacted Lurie in 2008 regarding the purchase of airfx.com. While the partie dispute the terms of the
offer at that time, no agreement was reached.
In 2011, Defendant filed a domain dispute complaint before the National
Arbitration Forum. On May 16, 2011, the
arbitration panel ruled in favor of Defendant and ordered that GoDaddy transfer
airfx.com to Defendant. See AirFX, LLC v.
ATTN AIRFX.COM, Claim Number FA1104001384655 (NAF May 16, 2011)).
Lurie
sought relief against the ordered transfer by filing a complaint which included
a claim for reverse domain name hijacking under 15 U.S.C. § 1114(2)(D)(v).
Defendant counterclaimed with claims of cybersquatting and trademark infringement. The parties filed cross motions for summary
judgment. On August 23, 2012, the
U.S. District Court for the District of Arizona ruled in favor of Lurie by
finding as a matter of law that Lurie was not liable for Defendant’s
counterclaims of cybersquatting or trademark infringement, and accordingly,
Lurie’s Motion for Summary Judgment on its reverse domain name hijacking claim
was granted. See AIRFX.com et al. v.
AirFX LLC, 2012 U.S. Dist. LEXIS 120285 (D. Ariz. August 23, 2012) (order here).
In
deciding Defendant’s cybersquatting claim, the issue centered around the
meaning of “registration” (ed.-an issue near and dear to my heart). The court detailed the Ninth Circuit’s recent
decision in GoPets Ltd. v. Hise, 657 F.3d 1024, 1030 (9th Cir. 2011) which clarified the meaning of
"registration" and found that a party’s re-registration and continued
ownership of a domain name that a party had registered long before a trademark
owner registered its trademarks does not violate the cybersquatting
statute (prior blog post here).
Defendant
attempted to distinguish GoPets because in that case, the original domain name
registrant transferred the domain name to an entity that he co-owned. In contrast, Lurie purchased airfx.com from
an unrelated third party. Defendant
argued that the purpose of the ACPA would be undermined if a cybersquatter who
purchases a domain name in bad faith is immune from liability simply because
the domain name he purchased existed before a mark was distinctive.
However,
the court found otherwise:
Nothing in the language of GoPets indicates that it should be read as narrowly as defendant suggests. GoPets did not distinguish between transfers of a domain name to related parties and other kinds of domain name transfers. To the contrary, GoPets broadly reasoned that if an original owner's rights associated with a domain name were lost upon transfer to "another owner," the rights to many domain names would become "effectively inalienable," a result the intention of which was not reflected in either the structure or the text of the ACPA.
In
short, the court, following GoPets, found that it was undisputed that airfx.com
was initially registered on March 21, 2003 by Bestinfo, ASE’s first use in
commerce of the AirFX mark was June 2005, and Lurie purchased airfx.com on
February 2, 2007 – and thus, Lurie’s registration of airfx.com in February 2007
"was not a registration within the meaning of § 1125(d)(1)” and
because Bestinfo registered airfx.com long before ASE registered its mark,
Lurie’s registration and ownership of
airfx.com does not violate the cybersquatting statute. The court granted summary judgment on
Defendant’s cybersquatting counterclaim in favor of Lurie.
As
for Defendant’s counterclaim for trademark infringement, the court focused on the
fundamental issue of whether Lurie used the mark “in commerce” (noting that “If
a person's use of a mark is noncommercial, it does not violate the Lanham Act.”). Defendant’s sole argument of Lurie’s
commercial use centered on particular allegations and admissions. However, the court found no dispute that
Lurie had never sold an AirFX product, have no advertising or marketing
activities, have no manufacturing activities, never developed a website for
airfx.com, and never sold any AirFX products or services on such website. The court further found that Lurie’s limited activity
of some pre-sales efforts and preliminary research, viewing such facts in the light
most favorable to Defendant, was still insufficient to constitute commercial
use of a mark.
Although plaintiffs have developed a brand name, registered a domain name, started researching the design of their wind tunnels and approached potential investors and customers, plaintiffs have not sold, manufactured, advertised, or marketed any product bearing the AirFX mark. Defendant points to no other facts to establish plaintiffs' commercial use of the AirFX mark.
As
such, without raising any genuine issue
of material fact as to whether plaintiffs' use of the mark was
commercial, the court found as a matter of law that no commercial use existed
and therefore, there could be no trademark infringement as a matter of law and
granted summary judgment on Defendant’s trademark infringement counterclaim in
favor of Lurie.
Finally,
with respect to Lurie’s claim for reverse domain name hijacking, the only issue
was whether Lurie’s registration of the airfx.com domain name was “not
unlawful."
Because we have concluded that plaintiffs cannot be liable under the ACPA for cybersquatting as a matter of law, and because plaintiffs are entitled to summary judgment on the trademark infringement claim, we conclude that there is no genuine issue of fact as to whether plaintiffs' use of the domain name is lawful.
Defendant
tried to argue that Lurie should not be entitled to such equitable relief because
Lurie “conducted the litigation in unprecedented, and unprofessional ways.” [ed.—there
are two sides to every story, and I’m sure Lurie has some stories about the
actions of Defendant’s counsel as well].
However, the court noted the clear mandate of 15 U.S.C. §
1114(2)(D)(v), which allows the court to “grant injunctive relief to the
domain name registrant, including the reactivation of the domain name or
transfer of the domain name to the domain name registrant." As such, the court ordered that the airfx.com
remain registered with Lurie.
The
court’s final words was to note that “[b]oth parties argue that this case is ‘exceptional’
under the Lanham Act, warranting an award of attorneys' fees. We will address a
motion for attorneys' fees if and when one is before us.” Stay tuned . . .
