uBid Sues GoDaddy for Cybersquatting Over Monetized Parked Domains

On April 6, 2009, Ubid, Inc. (“Ubid”) filed a cybersquatting lawsuit against The Godaddy Group, Inc. and its domain name registrar subsidiary company, Godaddy.com, Inc. (together “Godaddy”) in the U.S. District Court for the Northern District of Illinois. See UBID, Inc. v. The GoDaddy Group, Inc. et al, Case No. 09-cv-02123 (N.D. Ill.). A copy of the complaint can be viewed here.

Ubid describes itself as the “leading asset recovery solutions company for the world’s most trusted brands.” Or put in more layman’s terms, Ubid offers an online auction platform for sellers to sell off bulk quantities of excess inventory to the highest bidder. Ubid’s flagship sites are ubid.com and redtag.com. Ubid also has federal trademark registrations for several of its trademarks including UBID.COM, UBID, and REDTAG.COM.

Godaddy.com is the domain name registrar that claims to manage over 29 million domain names. As part of its domain name management services, Godaddy offers several programs for domain name registrants. One such program is a “Parked Page Service” – where Godaddy will “park” the domain name for its registrant customer and will put up a web page (or “landing page” as its sometimes called) which showcases various advertisements which generate pay-per-click revenue (or PPC revenue).

One interesting nuance regarding this service is that under the “Domain Name Registration Agreement” between Godaddy and its domain name registrant customers, Godaddy is authorized to redirect the registrant’s website for purposes of placing advertisements on the registrant’s webpage and reserves the right to retain all of the revenue from such advertising (emphasis added):

8. Parked Page Service
The Parked Page Service, includes, but is not limited to, the parking of pages on Go Daddy nameservers, and Starter/For Sale web pages (all parked pages, collectively, the "Parked Page"). For every domain name registered, Go Daddy will provide the Parked Page service free to its customers. Go Daddy will provide You with these services as long as You abide by the terms and conditions set forth herein and in each of Go Daddy's policies and procedures found here.

If You are using Go Daddy's Parked Page services, You agree that Go Daddy may point the domain name or DNS to one of Go Daddy's or Go Daddy's affiliates web pages, and that they may place advertising on Your web page and Go Daddy specifically reserves this right. Go Daddy also reserves the right to collect and retain all revenue obtained from such advertising. You may terminate Your use of the Parked Page service at any time through Your online account manager.

If You are using Go Daddy's Parked Page service, You are responsible for ensuring that any content placed on Your Parked Page by You or anyone on Your behalf conforms to all local, state, federal, and international laws. Further, You are responsible for ensuring the legal copyright to any images, text, or other web site elements not provided by Go Daddy. In order to use Go Daddy's Parked Page service, You must have a domain name registered with Go Daddy. Go Daddy is not responsible for making back-up copies of Your web site; this is solely Your responsibility. You agree that Go Daddy may place advertising on Your Parked Page and Go Daddy specifically reserves this right. Go Daddy also reserves the right to collect and retain all revenue obtained from such advertising.

Ubid alleges in its complaint that Godaddy, through this Parked Page Service, is acting as the “authorized licensee of the registrants” with respect to such domain names. Ubid’s complaint lists over 100 domain names containing the words “ubid” or “redtag” that are allegedly taking part in this service

Another service offered by Godaddy is its CashParking service. This is essentially the same monetization concept as above except that the domain name registrant pays a fee to Godaddy to have the pay-per-click advertising (courtesy of Google) placed on the domain name’s website and the revenue is then split between the registrant, Godaddy, and Google. Ubid’s complaint lists a few websites that it alleges is using this service including as ubidmotor.com and ubididoit.com.

Finally, the complaint mentions Godaddy’s Auction services, where the company helps sell domain names. Ubid’s complaint focuses on approx. 25 domain names that Ubid allegedly sold on February 9, 2009, including ubidsold.com, ubid-online.com, and ubid.ws.

Under the Anti-Cybersquatting Protection Act (15 U.S.C. §1125(d)(1)(A)), a person is liable to a trademark owner if such person, with a bad faith intent to profit from the mark, “registers, traffics in, or uses a domain name” that is identical or confusingly similar to a mark that is distinctive at the time of registration.

What makes this case unusual is that normal cybersquatting lawsuits (especially most cases these days) will go after the domain name registrants for placing these types of pay-per-click advertising on their websites in order to monetize their domain names. In this case, however, Ubid is going after the domain name registrar itself (and bypassing the registrants).

While Godaddy clearly did not register these domain names, by focusing on Godaddy’s right to place ads on parked pages and to keep the revenue from its Parked Page Service (or its sharing of revenue from its CashParking service), Ubid argues that Godaddy is “using” these domain names with a bad faith intent to profit – just like any domain registrant engaging in the same conduct. In addition, Ubid characterizes Godaddy’s role with respect to these domain names using these services as one of an “authorized licensee” of the domain name registrants in order to argue that Godaddy’s actions also constitute “trafficking” of such domain names. See 15 U.S.C. §1125(d)(1)(E), which defines the term “traffics in” as referring to “transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration.” (emphasis added). Furthermore, Ubid also argues that Godaddy’s Auction services allows Godaddy to “traffic” in such domains with a bad faith intent to profit by being involved in the sale of infringing domain names.

Most importantly, however, Ubid’s complaint, by focusing on Godaddy’s profiting from these allegedly infringing domain names that it is maintaining for registrants, gets around the “cybersquatting immunity” for domain name registrars set forth in 15 U.S.C. §1114(D)(iii) (“A domain name registrar, a domain name registry, or other domain name registration authority shall not be liable for damages under this section for the registration or maintenance of a domain name for another absent a showing of bad faith intent to profit from such registration or maintenance of the domain name.”)

Ubid is seeking Godaddy's profits, or alternatively statutory damages under 15 U.S.C. §1117(d) ($100,000 per domain name), for each of the domains cited in its complaint along with the injunctive relief to stop Godaddy from further use or trafficking in of domains names infringing Ubid’s marks.

With Ubid going up against a major company like Godaddy (definitely not your normal cybersquatter), this should be an interesting case. I would expect that Godaddy will at least answer the complaint (unlike OnlineNic did with Verizon's cybersquatting complaint).

As a sidenote, does anybody else find it odd that Godaddy’s Domain Name Registration Agreement, which allows Godaddy to put ads on a registrant’s parked web page, nonetheless, appears to hold the registrant responsible “for ensuring that any content placed on Your Parked Page by You or anyone on Your behalf conforms to all local, state, federal, and international laws.” So if a company sues Godaddy for allegedly infringing PPC ads appearing on a parked page (ads that Godaddy, not the registrant, was responsible for putting up), the registrant is held responsible for such infringement?

“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.

Dell alleges counterfeiting in trademark infringement lawsuit against Typosquatting Domain Tasters

The Washington Post ran an article yesterday about Dell Inc.’s (“Dell’s”) new “cybersquatting” lawsuit against several domain name registrars. See Brian Krebs, “Dell Takes Cybersquatters to Court,” The Washington Post, November 28, 2007 (link here).

The complaint apparently names three domain name registrars – BelgiumDomains, CapitolDomains, and DomainDoorman – along with several alleged Bahamian shell corporations (e.g,, Caribbean Online International, Domain Drop S.A., Domibot, Highlands International Investment, Keyword Marketing Inc., Maison Tropicale, Marketing Total S.A, Click Cons Ltd., Wan-Fu China Ltd. and Web Advertising Corp.) that the registrars supposedly used to act as the companies registering the domains. The suit also names Miami-resident Juan Pablo "JP" Vazquez and alleges that he is connected to the companies.

The case was apparently filed in the U.S. District Court for the Souther District of Florida in October, but placed under seal until yesterday. The judge in the case sealed the case while federal marshals seized hard drives and other computer equipment from Vazquez's home on November 9th. The judge also issued a temporary restraining order against the defendants barring them from using the practice of “domain tasting” to make money off of and then deleting any domain names that may infringe upon Dell's trademarks.

“Domain tasting” is cyber-squatting business model that came about because of rules established by Internet Corporation for Assigned Names and Numbers (ICANN) which give registrars up to five days to sample domains before actually having to purchase them. This allows these registrars to basically buy up large numbers of domain names, test (or “taste”) their value through pay-per-click ads on the parked domains, and then give up domain names that do not appear to generate enough traffic to provide any value. By purchasing domain names of commonly misspelled web site names, often including registered trademarks (so called “typosquatting”), the domain registrants can often make money on the misdirected web surfers who opt to click on one of the many6 pay-per-click ads rather than retyping the correct domain name address.

According to Dell, however, the defendants have been combining “typosquatting” with “domain tasting” by setting up a network of registrar companies that continually purchase and give up infringing domain names so that the companies never have to pay for them all while still profiting from them.

The lawsuit cites an example where on May 25, 2007, DomainDoorman registered dellfinacncialservices.com. Five days later, then the register dropped the domain name, the same domain was registered by BelgiumDomains within minutes. Five days later, that company dropped the domain name, only to have it be registered by CapitolDomains. When that company gave it up give days later, the domain was again registered by DomainDoorman. The same approach was done with other such domain names as dellinspirion.com, delloutletcom.com, and dellsuportcenter.com.

What has raised interest in this case, however, is that in addition to the standard trademark infringement causes of action, including cybersquatting cause of action under 15 U.S.C. §1125(d), Dell also alleges counterfeiting against the defendants (i.e., that the typosquatting is effectively a counterfeit of the authentic “trademark holder’s domain name”). While federal law allows a court to award damages up to a maximum of $100,000 per domain against cybersquatters, if the same domains are found to constitute counterfeits, then federal law would allow a court to award damages up to $1 million per violation.

If the defendants actually put up a fight in this case, Dell may have some hefty evidentiary hurdles to overcome and is likely to have to engage in some major discovery efforts to untangle this offshore web of “typosquatting domain tasters.”

As for the counterfeiting claim, the court is likely to grant Dell the injunctive relief it wants based on the trademark infringement and cybersquatting claims alone. Dell will also probably be awarded damages on such claims. Should the judge dismiss this novel cause of action, it will be interesting to see if Dell decides to appeal such a decision – either to make some new law or to get a larger damage award. Of course, one wonders whether it would be worthwhile to fight so hard for an additional $900,000 in damages. After all, winning a judgment is one thing, enforcing it is another -- especially where so much of the activity appears to be based offshore.

Dell is probably better off spending that money on a campaign to force ICAAN to change its rules to prevent “domain tasting” – or to at least put enough of a price tag on such tasting that the business model would not be as profitable.

Las Vegas’ Cosmopolitan Resort and Casino goes after cybersquatters

Over the last two weeks, 3700 Associates, LLC (“3700 Associates”), the developer of the Cosmopolitan Resort & Casino in Las Vegas, has filed several trademark infringement lawsuits in the U.S. District Court for the District of Nevada against various defendants. See 3700 Associates, LLC v. Griffin et al, Case No 2:2007cv01453 (D. Nev. Filed October 31, 2007); 3700 Associates, LLC v. Roshni et al, Case No. 2:2007cv01459 (D. Nev. Filed November 1, 2007); and 3700 Associates, LLC v. Inter Wires, Inc., Case No. 2:2007cv01460 (D. Nev. Filed November 1, 2007).

Until yesterday, however, the nature of these lawsuits was not apparent (I apologize for not shelling out the $1 to download the complaint from PACER). But after looking at the named defendants in the trademark infringement lawsuit filed by 3700 Associates yesterday, one can take an educated guess at the nature of the lawsuits.

On November 6, 2007, 3700 Associates filed a complaint against the following named defendants -- cosmopolitanhotelcasino.com, cosmopolitan-hotel.com, cosmopolitanlasvegashotel.com, cosmopolitanvegas.com and cosmopolitan-vegas.com. See 3700 Associates, LLC v. Cosmopolitanhotelcasino.com, et al, Case No. 2:2007cv01479 (D. Nev.). Without seeing a copy of the actual complaint, 3700 Associates appears to be going after domain registrants buying up domain names that are similar to the THE COSMOPOLITAN RESORT & CASINO mark.

3700 Associates announced the name for its hotel and casino project back on November 24, 2004 (click here for article announcing the name of the Cosmopolitan Resort & Casino). The day before, 3700 Associates filed several applications for federal registration of THE COSMOPOLITAN RESORT & CASINO word mark and stylized variation thereof: a) the word mark and stylized mark covering real estate services featuring condominiums (which applications are scheduled for registration in due course) and b) the word mark and stylized mark covering vacation time shares, casino services, and resort hotels (which have received notices of allowance and are awaiting Statements of Use).

3700 Associates was not as lucky, however, with some of its other pending applications for registration. When two of its applications for THE COSMOPOLITAN RESORT & CASINO were published for opposition (for restaurant and bar services and clothing), a notice of opposition was filed by Hearst Communications, Inc. (“HCI”), the publisher of the Cosmopolitan magazine and holder of several registrations for the mark COSMOPOLITAN. See Hearst Communications, Inc. v. 3700 Associates, LLC, Opposition No. 91177407 (T.T.A.B. Filed May 21, 2007). The consolidated opposition includes HCI’s opposition to several other pending applications filed by 3700 Associates which contain the word COSMOPOLITAN, including THE COSMOPOLITAN BEACH CLUB and COSMO BEACH CLUB. HCI argues that registration will cause confusion in violation of Section 2(d) of the Trademark Act (15 USC §1052(d)) and will cause dilution of HCI’s famous marks under 43(c) of the Trademark Act (15 USC §1125(c)). 3700 Associates’ answer to HCI’s opposition does not give any clues as to how the company plans to defend HCI’s allegations of likelihood of confusion and dilution.

Getting back to 3700 Associates’ cybersquatting lawsuits, the lawsuits likely resemble the lawsuit filed by Las Vegas Sands Corp against a Venetian cyber squatter (Vegas™Esq Blogged here). 3700 Associates is likely arguing that the defendants are violating Section 43(d) of the Lanham Act (15 USC §1125(d)), which 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 or b) is identical or confusingly similar to or dilutive of a famous mark 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). And given that the defendant domain name registrants are not even attempting to use the registered sites (they are being parked by GoDaddy and protected by the company’s private domain registration), 3700 Associates is likely to be successful in arguing the “bad faith intent to profit” and obtaining an order to transfer the domains at issue.

SHAMELESS PLUG ALERT:
I cannot write about the Cosmopolitan without providing a link to my favorite Las Vegas real estate agent. If anyone is interested in purchasing a Cosmopolitan condominium (or any real estate in the Las Vegas area), please check out her website. Tell her the “Vegas Trademark Attorney” sent you.

Lulu lo-loses first round of trademark hubbub with Hulu

In the trademark infringement lawsuit brought by Lulu Enterprises, Inc. (lulu.com) against N-F Newsite, LLC (a/k/a hulu.com) (see prior Vegas™Esq post here), the District Court, on Friday, October 19, 2007, denied Plaintiff Lulu’s request for a preliminary injunction against Defendant Hulu. See Lulu Enterprises, Inc. v. N-F Newsite, LLC, Case No. 5:7-CV-347-D, Document 116 (E.D. N.C.) (download order here).

The court first explained the four factors for deciding whether to grant a preliminary injunction:

1. likelihood of irreparable harm to the plaintiff if the injunction is denied, where the irreparable harm is actual and imminent, and not remote or speculative;


2. if plaintiff shows actual and imminent irreparable harm, then harm must be balanced against the likelihood of irreparable harm to the defendant if the injunction granted;


3. likelihood that plaintiff will succeed on the merits, where the extent of the likelihood of success that needs to be shown depends on the balance of the harms (i.e., if balancing the harm favors the plaintiff, then plaintiff need only show serious questions about the merits of the case that are fair grounds for litigation; whereas if the balancing the harm favors the defendant, then plaintiff must show strong probability of success of the merits; and


4. whether the injunction would serve public interest.

See Direx Israel, Ltd. v. Breakthrough Med. Corp., 952 F.2d 802 (4th Cir. 1991).

While the court also set forth the Fourth Circuit’s seven factor test for determining likelihood of confusion in order to assess Lulu’s unfair competition claim (see CareFirst of MD., Inc. v. First Care, P.C., 434 F. 3d 263, 267 (4th Cir. 2006)), the court determined that such analysis was not necessary because Plaintiff’s asserted harm was not actual and imminent. The mere existence of irreparable harm is not enough – the plaintiff must make a clear showing of irreparable harm that is actual and imminent.

Lulu’s argument of irreparable harm rested on the premise that Hulu was intending to enter Lulu’s line of business. Lulu cited to Hulu’s intent-to-use trademark application, but the court rejected the long list of goods and services set forth in Hulu’s registration application, instead reinforcing that what matters is how the marks are used in the marketplace. Lulu also cited to a Hulu’s responses to discovery interrogatories as well as statements by Lulu representatives during depositions. However, the court felt that this evidence was outweighed by other sealed evidence as well as Hulu’s statements at oral argument which indicated that Hulu’s plans “are very narrow and are limited exclusively to making big-budget feature TV and movie content available for its user.” Order at 7.

In short, the court believed that Hulu did not intend to enter Lulu’s line of business (internet self-publishing) once Hulu fully launched its website, and thus faces no actual or imminent harm from Hulu’s business. The court did emphasize, however, that this decision to deny the injunction under the unfair competition claims was based strongly on Hulu’s good-faith assurance about what its website will and will not contain, and the court intends to hold Hulu to its word.

The court also denied a preliminary injunction based on Lulu’s cyberpiracy claims on the grounds that Plaintiff could not show bad faith on the part of Hulu in choosing the URL hulu.com.

Las Vegas Sands Files Federal Lawsuit Against “Venetian” Cybersquatter

On October 9, 2007, Las Vegas Sands Corp. (“Las Vegas Sands”) filed a lawsuit against Joshua Murega, a California resident, in the U.S. District Court for the District of Nevada. A copy of the complaint can be downloaded here (courtesy of me).

As most people who live in Las Vegas know, Las Vegas Sands operates The Venetian Resort Hotel and Casino. In addition, Las Vegas Sands holds numerous registered trademarks and service marks for various goods and services that are variants of the mark VENETIAN. See, e.g., VENETIAN, THE VENETIAN, and THE VENETIAN RESORT HOTEL CASINO.

At issue in the complaint is Murega’s registration and ownership of various .COM domain names which contain the word “venetian,” including the following (for which I have purposely not included any hyperlinks):

• Venetian-weddings
• Venetianaccomodations
• Venetiandeals
• Venetiandining
• Venetiancasinos
• Venetianshows
• Venetianreservations
• Venetianshopping
• Venetian-reservations
• Venetiangambling
  

Mr. Murega registered the domain names on or about August 29, 2007. On September 25, 2007, Las Vegas Sands’ counsel sent a cease and desist letter to Murega demanding that Murega cease all use of the domain names and that the domain names be transferred to Las Vegas Sands. Murega responded with a letter offering to transfer the domain names “if your response is favorable.” It is not clear from the complaint what, if anything, happened after that.
Las Vegas Sands alleges that the domain names were not registered in good faith and that Murega derives income from the links posted on the website. The complaint sets forth five counts: cybersquatting under 15 U.S.C. §1125(d), false designation of origin/unfair competition under 15 U.S.C. §1125(a), common law trademark infringement, deceptive trade practices under NRS 598.0903 et seq., and intentional interference with prospective economic advantage.

Las Vegas Sands is asking for an injunction prohibiting Murega from using the VENETIAN mark and from registering any more domain names containing the VENETIAN mark. Las Vegas Sands also requests an order to the domain name registrar of Murega’s domain names transferring the domain names to Las Vegas Sands. Finally, Las Vegas Sands asks for damages (compensatory, consequential, statutory, exemplary, and/or punitive) as well as interests, costs, and attorney’s fees.

Vegas™Esq. Comments:
Focusing on just the § 1125(d) cyber squatting count, the law states that a domain name registrant is liable to a trademark owner if the registrant (i) registers, traffics in, or uses a domain name that a) is identical or confusingly similar to a distinctive mark or b) is identical or confusingly similar to or dilutive of a famous mark 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).

It is safe to say that Mr. Murega has registered and is using a domain name that is confusingly similar to and possibly even dilutive (for some of the domain names) of a famous mark. So his liability for cybersquatting rests of the question of bad faith. The law sets forth the nine factors that courts can consider in determining whether a person had a “bad faith intent to profit.” See § 1125(d)(1)(B).

I seriously doubt Mr. Murega can show any other trademark rights to the name. He has no prior use of the domain name in connection with a bona fide offering of any goods or services. Upon receiving Las Vegas Sands’ cease and desist letter, he offered to transfer the sites without having used or having a bona fide attempt to use the domain name to offer any goods or services. Given the fame of the VENETIAN mark, he could not have legitimately believed or had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful. The combination of the word VENETIAN with such words as weddings, casinos, shows, and dining clearly shows a connection of the mark VENETIAN to the Las Vegas hotel and casino (and not as an adjective pertaining to Venice). Finally, the complaint alleges that his domain names went to directory websites that provided "click-through" links to various other hotel websites which compete with The Venetian. All of these factors favor a finding of “bad faith intent to profit.”

However, Mr. Murega may be setting up to assert a “fair use” defense. I did not download all of the exhibits to the complaint, and therefore, do not know what the websites looked like before today. But when I visited a few of Murega’s sites (the few that were even working), what I discovered was a page with a 10 second countdown that said “You Are Being Redirected to The . . . .” (origin of gaming, beautiful city of the world, etc.) On this page (for at least one of the sites), there was a Vegas.com banner ad that one could click on. Then after the 10 second countdown, a page appears providing eleven paragraphs of factual data about Venice. If you are really curious and have to see it to believe it, click here and have a good laugh at a web page that looks like it was put together by a 12-year old.

Very clever, Mr. Murega. But judges are not as naïve as you may think. They have a great deal of discretion in this area, and will likely see this lame attempt to make some “fair use” out of your website as further evidence that your original registration of such domains was indeed in bad faith.

I would be surprised if Mr. Murega even answers the complaint. If he does, I would suspect it will be “in pro per” as I doubt any attorney would want to represent Mr. Murega in defending his domain names – at least not without making sure to get a large retainer upfront.

As for why Las Vegas Sands did not first pursue arbitrations under ICAAN’s Uniform Domain-Name Dispute-Resolution Policy, the most likely reason is that Las Vegas Sands wanted a legal order in place that it can assert to prevent Mr. Murega , under penalty of the law, from ever doing this again. After all, now that Las Vegas Sands has opened The Venetian Macao, Mr. Murega may try again. http://www.venetianmacaocasinos.com/ is available!

More companies using their trademarks to quash online critics

Who amongst us hasn’t wanted to speak out against a particular company that has wronged us in some way? The Internet has made it much easier for a single voice to be heard among the masses. With more consumers using the Internet to express their grievances over particular companies, the companies are taking notice and using their trademark portfolio as a weapon to silence such criticism.

Last Friday, The Register ran a story (link here) about one such effort by Lowe's Companies Inc. (“Lowe’s”). Allen Harkleroad received a cease and desist letter from an attorney for Lowe’s regarding his website -- http://www.lowes-sucks.com/. Harkleroad paid Lowe’s $3,500 to install a chain-link fence; however, after the fence was installed, Harkleroad repeatedly complained to Lowe's about gaps in the chain-link fence that were so large that his dogs were able to repeatedly escape from his yard. After being unable to resolve the problem with Lowe’s, Harkleroad refused to pay the rest of the money owed for the fence and created the lowes-sucks website, which documented his ordeal, including pictures of the poorly constructed fence.

Despite no logos being used on the website and despite the obvious non-affiliation between the website and Lowe’s, the company’s attorney maintained in his letter that Harkleroad’s use of Lowe’s trademarks, including the registration of http://www.lowes-sucks.com/, infringes upon Lowes’ trademark rights, specifically, the rights of LF, LLC, a Delaware limited liability company, that apparently holds and manages Lowe’s trademarks.

Harkleroad is fortunate that he is only facing threatening legal letters at this time. One Maryland man is already facing the prospect of having to go to court to fight a similar battle.

Earlier this month, the Maryland Daily Record (subscription only link) ran a story about a man named Erik G. Levy who bought his Delaware home from Gemcraft Homes, Inc. in 2005. Apparently not satisfied with his home, Mr. Levy started up his own website named http://www.bewareofgemcraft.com/, documenting his troubles with Gemcraft and urging homeowners to be wary of buying a new home constructed by the company.

Now, Gemcraft is suing Levy for tortious interference, trademark infringement, defamation, intentional infliction of emotional distress and invasion of privacy and asking for $8 million. The complaint alleges that Levy is making defamatory statements about the company and its employees on the website, posting telephone numbers and addresses of the employees, and posting signs around Delaware and sending out mailers advertising his site.

This trend by companies to use trademark law against these so-called gripe websites has been growing for some time. See Baldas, Tresa “Trademark Lawsuits: The Price of Online Griping,” The National Law Journal (December 2, 2004) (link here). There is even a website dedicated to websites posting consumer gripes -- http://www.webgripesites.com/.

The trend has its origins in the Anticybersquatting Consumer Protection Act, which was enacted into law on November 29, 1999, and established a cause of action that trademark owners could bring against registrants of domain names that contain such owner’s trademarks. A domain name registrant is liable to a trademark owner if the registrant (i) registers, traffics in, or uses a domain name that a) is identical or confusingly similar to a distinctive mark or b) is identical or confusingly similar to or dilutive of a famous mark 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).

The problem has been with respect to the interpretation of when a registrant has a “bad faith intent to profit.” While the ACPA sets forth nine factors a court may consider in determining “bad faith intent to profit” (see 15 U.S.C. § 1125(d)(1)(B)), the Federal Circuits have taken differing approaches in deciding the issue. For a discussion of the differences among the Federal Circuit Courts, see Mazzie-Briscoe, Sarah, “Free Speech v. Trademark Rights: Has the weather changed?” DePaul University College of Law (March 19, 2006) (link here).

For most courts, the determination of “bad faith intent to profit” comes down to whether the website owner intended to extort money from the trademark owner or merely to express an opinion protected by the First Amendment, and involves an analysis of the facts and a weighing of the website owner’s right to free speech against the trademark owner’s right to protect the value and goodwill of its trademarks.

It would seem obvious that these gripe websites and their noncommercial use of a trademark would protected by the First Amendment. However, because the determination is fact specific, there is no quick and easy way of deciding such cases either way. Courts must review the facts because there may indeed be facts supporting an argument that a website owner was looking for a quick payday and established the website simply to get paid off. For a good article on the complex trademark and First Amendments issues surrounding these “forum websites,” see Barrett, Margreth, "Domain Names, Trademarks, and the First Amendment: Searching for Meaningful Boundaries," Connecticut Law Review, Vol. 39, 2007 (Available at SSRN: http://ssrn.com/abstract=928261).

Such uncertainty tends to favor the trademark owners, who can use the prospect of costly litigation to shut down website owners despite the fact that such website owners may be perfectly within their first amendment rights. In Mr. Levy’s case, the attorney for Gemcraft alleges that Levy is trying to use the Web site in an unlawful attempt to extort money from Gemcraft. The use of the phrase “attempt to extort money” is an obvious attempt to cast Gemcraft’s allegations as colorable under the ACPA. Allegations are one thing – facts are another.

It is puzzling why companies are willing to spend so much time and energy into silencing these consumer websites when, by taking such actions, they end up bringing more attention to these websites than they likely every would have received. If Mr. Harkleroad and Mr. Levy have the energy to put forth a fight, the facts seem to favor their websites as the type which expresses an opinion protected by the First Amendment. Whether they have the wherewithal to put up a fight is another matter. In a time when even a simple defense of a frivolous case can easily cost $20,000, who can blame them for settling out of court, walking away, and moving on with their lives.

[Sept. 26, 2007 update: Coincidentally, arstechnica.com also ran a story today on this very subject (link here). ]