February 2010 Issue

Civil Cases

Webadviso v. Bank of Am. Corp.,
2009 WL 5177997 (S.D.N.Y. Dec. 31, 2009) (granting defendants’ motion for preliminary injunction); 2010 WL 521117 (S.D.N.Y. Feb. 16, 2010) (granting defendants’ motion for summary judgment)

ABSTRACT
The district court dismisses plaintiff’s request for a declaratory judgment that his use of the domain names bofaml.com and mlbofa.com, registered on the day that defendant Bank of America’s (also known as “B OF A”) acquisition of Merrill Lynch (also known as “ML”) was announced, did not violate the defendants’ rights and instead found that he registered and used the names with a bad-faith intent to profit from the B OF A and ML trademarks.

CASE SUMMARY

FACTS
Plaintiff J. Taikwok Yung operated a domain-name business that acquired domain names and parked them with domain-parking service providers to generate revenue from pay-per-click advertisements.  Yung had a history of registering domain names that included well-known trademarks, including combinations of marks of financial institutions that considered mergers (e.g., wachoviaciti.com).  Defendant Bank of America Corporation (“BOA”), one of the world’s largest financial institutions, owned the federally registered marks BANK OF AMERICA and B OF A.  Defendant Merrill Lynch & Co., Inc. (“Merrill”), another leading financial company, owned the federally registered mark MERRILL LYNCH and various ML-formative marks.  BOA acquired Merrill in September 2008.  Yung registered the domain names bofaml.com and mlbofa.com on the same day the media reported the acquisition.  Both domain names linked to websites offering the domains for sale and both sites displayed information about financial services and various pay-per-click advertisements.

In February 2009, BOA and Merrill jointly filed a UDRP complaint against Yung regarding the bofaml.com domain name.  Counsel for BOA contacted Yung to attempt to resolve the matter, and Yung responded with an offer to sell the domain, stating that “[t]his is a high quality domain name and if its [sic] auctioned off in the open market it would fetch near 7 figures.”  In March 2009, BOA learned that Yung had also registered mlbofa.com, bofamerrill.com, and merrillbofa.com, and amended its UDRP complaint to include those domains.  The UDRP panel ruled that the bofaml.com and mlbofa.com domain names were confusingly similar to BOA’s B OF A trademark and that Yung registered the domains in bad faith, and ordered transfer of the domain names to BOA.  Although not discussed in the court’s opinion, the UDRP panel surprisingly held that the domains bofamerrill.com and merrillbofa.com were not confusingly similar to BOA and Merrill’s marks because they had no rights in combinations of their respective marks.

To stay the UDRP transfer, Yung filed this lawsuit seeking a declaratory judgment that his use of the domain names did not violate BOA’s rights.  BOA counterclaimed for cybersquatting and other claims.  In July 2009, the district court granted BOA’s motion for a temporary restraining order and ordered transfer of the domain names bofaml.com and mlbofa.com to BOA pending a preliminary-injunction hearing.  At issue in these decisions were BOA’s motions for preliminary injunction and for summary judgment.

ANALYSIS
The district court granted BOA’s motion for a preliminary injunction.  BOA showed a likelihood of success on its cybersquatting claim against Yung because, among other things: (1) the domain names bofaml.com and mlbofa.com were confusingly similar to BOA’s marks; (2) BOA’s B OF A mark and Merrill’s ML mark were both strong and distinctive marks; (3) Yung acted in bad faith by registering the domain names the day the merger was announced solely to profit from the sale of the domains and by suggesting to BOA’s counsel that the bofaml.com domain name was worth “near 7 figures”; and (4) Yung admittedly registered numerous other domain names containing well-known trademarks in hopes of selling them to the trademark owners.

BOA also showed that it would suffer irreparable harm if Yung was allowed to continue using and controlling the bofaml.com and mlbofa.com domain names.  Customers seeking information regarding the BOA-Merrill merger could use a combination of the parties’ trademarks and mistakenly arrive at Yung’s websites.  Further, BOA may want to use the domain names for its legitimate business matters regarding the acquisition, and it should have the ability to do so.  The court thus preliminarily enjoined Yung’s use of the bofaml.com and mlbofa.com domain names and any iterations thereof, and ordered ownership of the domains to remain with BOA pending resolution of the case.  The court also observed that Yung did not state a viable claim in his complaint and did not have a viable defense to BOA’s counterclaims.  The court thus ordered Yung to show cause why summary judgment should not be granted against him. 

Six weeks later, the district court granted summary judgment in BOA’s favor based on the court’s findings regarding BOA’s cybersquatting claim on BOA’s preliminary-injunction motion.  The court rejected all of Yung’s arguments against summary judgment.  Although the UDRP panel rendered a “split” decision because it ordered the transfer of only the bofaml.com and mlbofa.com domain names, that fact was irrelevant in this action because BOA sought relief for only the transferred domain names.  Yung also claimed that he was entitled to discovery, but the court held that he did not show either the existence of genuine issues of material fact that would warrant discovery or that discovery would reasonably lead to admissible and helpful evidence.  Finally, the court rejected Yung’s argument that he never sold or attempted to sell the domain names because it contradicted Yung’s allegations in his complaint about his activities.  Moreover, even if Yung never actually sold a domain name, the indisputable evidence of record showed unequivocally that he emailed BOA’s counsel soliciting an offer and suggesting the “7 figures” value of the bofaml.com domain name.  The court granted BOA’s motion for summary judgment and dismissed the complaint.

CONCLUSION
This decision underscores courts’ intolerance for cybersquatters, especially those that opportunistically register and use domain names to take advantage of newly announced company mergers, company names, product names, and the like.