October 2011 Issue

Civil Cases

GoPets Ltd. v. Hise,
2011 WL 4394353 (9th Cir. Sept. 22, 2011)

ABSTRACT
Edward Hise (“Defendant”) registered the domain name gopets.com in 1999 and planned to use it to provide pet-care information.  GoPets Ltd. (“Plantiff”) launched a “GoPets” online game in 2004.  After several failed attempts to purchase gopets.com from Defendant, Plaintiff filed a UDRP complaint and lost.  Defendant then transferred the domain name to a company he owned.  Plaintiff sued for cybersquatting and other claims, and the district court granted summary judgment in Plaintiff’s favor.  On appeal, the Ninth Circuit reversed the finding of cybersquatting, holding that Defendant did not violate the ACPA when he registered gopets.com in 1999, because Plaintiff was not even using its mark then.  The Ninth Circuit also held that Defendant’s later re-registration of the domain name in the name of his company in 2006, which occurred after Plaintiff’s mark became distinctive, did not constitute a new registration under the ACPA.

CASE SUMMARY

FACTS
Defendant registered the domain name gopets.com in 1999 and planned to use it to provide information about pet care.  Plaintiff created GoPets, an online game featuring virtual pets, in 2004.  Beginning in 2004, Plaintiff made several unsuccessful attempts to purchase gopets.com from Defendant for hundreds of dollars.  In 2006, Plaintiff filed a UDRP complaint, but the panel held in Defendant’s favor.  Shortly thereafter, Plaintiff offered again to buy the domain from Defendant, this time offering $5,000 and then $40,000.  A few months later, Defendant counteroffered to sell gopets.com for $5,000,000 and threatened to add “competitive metatag[s]” to gopets.com to drive traffic away from Plaintiff’s site.  Two days after making this offer, Defendant transferred the domain name to a company he owned with his brother.  Defendant also registered eighteen additional “gopets”-formative domains.  In March 2007, Defendant added content to the gopets.com site consisting of a logo and the text, “Welcome to goPets.com the official online website.  goAhead pet lovers tell your friends that GoPets.com will be arriving soon!”  Plaintiff sued Defendant for cybersquatting, trademark infringement, and unfair competition.  The district court granted Plaintiff’s motion for summary judgment on all claims and awarded statutory damages for cybersquatting of $100,000 for gopets.com and $1,000 each for the other domains.  Defendant appealed.

ANALYSIS
The Ninth Circuit reversed in part and affirmed in part.  Defendant’s main argument on appeal was that he did not violate the ACPA when he registered gopets.com in 1999, because the domain name was not “identical or confusingly similar to a mark that was distinctive at the time of registration” as required to establish cybersquatting under the ACPA.  Plaintiff obviously could not meet this standard because it did not even start using its GoPets mark until years later in 2004.  Although Plaintiff conceded that Defendant did not violate the ACPA when he registered the domain in 1999, Plaintiff argued that when Defendant transferred the domain to his company in 2006, he “re-registered” a domain name that constituted a “new” registration made in bad faith.

The Ninth Circuit rejected Plaintiff’s argument, holding that “Congress meant ‘registration’ to refer only to the initial registration” and not to re-registrations.  It distinguished the Third Circuit’s decision in Schmidheiny v. Weber, 319 F.3d 581 (3d Cir. 2003), which held that re-registration was a new registration under the ACPA.  Initially, Schmidheiny involved the provision prohibiting registration of domains consisting of a living person’s name and selling them for profit regardless of whether the person’s name enjoyed trademark rights (15 U.S.C. § 8131(1)(A)), and not the provision covering conventional trademarks (15 U.S.C. § 1125(d)(1)).  Moreover, the Third Circuit assumed that the ACPA did not cover the initial registration of the disputed domain because it occurred before the ACPA’s passage, and was concerned that holding for the Defendant would allow the domain names of living persons to be sold in perpetuity without the living person’s consent.  The Ninth Circuit, however, agreed with the Second Circuit that the ACPA applies retroactively to domains registered before its enactment, and thus that the Third Circuit erred in assuming that the ACPA did not cover the original registration in Schmidheiny.

Moreover, the Ninth Circuit looked at the statute and did not see “[any] basis in [the] ACPA to conclude that a right that belongs to an initial registrant of a currently registered domain name is lost when that name is transferred to another owner.”  It noted that “the general rule is that a property owner may sell all of the rights he holds in a property,” and that allowing re-registration to count as a new registration under the ACPA would “make the rights to many domain names inalienable.”

However, the Ninth Circuit affirmed the district court’s holding that Defendant’s eighteen additional “gopet(s)” domains constituted cybersquatting.  It also affirmed the district court’s award of statutory damages of $1,000 for each domain and ordered the transfer of those domains to Plaintiff.  The court held that Defendant’s reliance on the UDRP decision was misplaced because it was valid only for the original gopets.com domain name and did not apply to Defendant’s later registrations.

Finally, the district court held that Defendant’s actions regarding the gopets.com name constituted both cybersquatting and infringement, but it granted relief only under the ACPA.  Although the Ninth Circuit reversed the ACPA violation, it stated that “it is possible that some relief . . . may be appropriate based on the Lanham Act violation,” presumably based on the logo and wording Defendant displayed on his gopets.com website.  The Ninth Circuit thus remanded the case to the district court “for determination of any relief [it] might find appropriate for [the infringement] violation.”

CONCLUSION
This decision is of interest because it appears to create a split between the Ninth and Third Circuits on whether a transfer of a domain name constitutes a new registration for purposes of evaluating a cybersquatting claim under the ACPA.  This distinction could make the difference between a winning and losing a cybersquatting claim.