Plaintiff registered the domain names “victoriasexsecret.com,” “victoriasexysecret.com,” “victoriasexsecret.com,” and “victoriasexysecret.com” in 1998 and intended to use them for adult-content web sites. Defendant, owner of the registered VICTORIA’S SECRET mark for women’s lingerie, clothing, and accessories, sent plaintiff a cease-and-desist letter in May 2000. Plaintiff initially agreed to transfer the domain names to defendant but never executed the transfer forms. Defendant then filed a UDRP Complaint, the UDRP panel ordering plaintiff to transfer the four domain names to defendant. To stay the UDRP decision, plaintiff filed this action seeking a declaration that its ownership of the domain names did not violate the Lanham Act. Defendant counterclaimed for trademark infringement, unfair competition, dilution, and cybersquatting under the ACPA. The court granted defendant’s motion for summary judgment. First, the court held that plaintiff violated the ACPA because it registered and used the four domain names with a bad-faith intent to trade upon the famous VICTORIA’S SECRET mark. Plaintiff had no valid trademark rights in the VICTORIA’S SECRET mark and had not previously used the domain names for the bona fide offering of any goods or services. The court rejected plaintiff’s ACPA safe-harbor defense that it registered its domain names with the reasonable belief that its proposed use was fair and otherwise lawful because it actually intended to profit from the notoriety of its planned spokesperson, 1997 Playmate of the Year, Victoria Silverstedt. According to the court, however, “[i]t requires a quantum leap of imagination to believe that a user of the internet, searching for an adult entertainment web site, would have the requisite information or knowledge to connect in some way the name of Playboy bunny Victoria Silvstedt with his or her website search.” Moreover, plaintiff did not have permission to use Ms. Silvstedt’s name or likeness for any business purposes because she had earlier terminated her relationship with plaintiff. In any event, a defendant who acts even partially in bad faith in registering a domain name was not entitled to benefit from the ACPA’s safe-harbor provision. Plaintiff’s denial that it had any bad-faith intent was not sufficient by itself to invoke the safe-harbor provision. To hold otherwise would permit any cybersquatter to use the safe-harbor defense. Second, on the issue of trademark infringement, plaintiff argued that the addition of the words “sex” or “sexy” to the VICTORIA’S SECRET mark dispelled any potential consumer confusion. The court found, however, that slight differences between domain names and registered marks, such as the addition of minor or generic words, did “nothing to abate likely confusion or dilutive effect.” Both parties’ use of the Internet as a trade channel was significant “because Internet consumers often do not have the opportunity to exercise the degree of care they might ordinarily use if the goods/services were before them.” Next, the court found that defendant’s domain names diluted the famous VICTORIA’S SECRET mark by both tarnishment and blurring. The intended use of the domain names for “entertainment of a lascivious nature suitable only for adults” mandated a finding of dilution by tarnishment. Plaintiff’s use also constituted a classic example of dilution by blurring because consumers may no longer perceive the VICTORIA’S SECRET mark as representing one single source. Plaintiff’s use was commercial within the meaning of the Lanham Act based on its registration of the domain names, its stated intent to use those names for adult-entertainment websites, and its extensive preparations to operate those websites. The court awarded defendant $40,000 in statutory damages ($10,000 per name) under the ACPA. The court also awarded defendant its reasonable attorney’s fees after finding the case exceptional under the ACPA. But the court denied defendant’s request for punitive damages for non-Lanham Act violations as defendant neither presented any evidence of actual damages nor stated in its counterclaim the standards for an award of punitive damages under Florida statutes or common law.