Organization that advocates for trademark holders asks Supreme Court to settle circuit split over cybersquatting law.
The International Trademark Association (INTA) has asked the U.S. Supreme Court to settle a circuit split related to the Anticybersquatting Consumer Protection Act (ACPA).
The organization that represents trademark holders has filed an amicus brief asking the court to overturn the Ninth Circuit precedent on what constitutes a domain name registration under the law.
Conflicting Precedent
A key question under the ACPA is when a domain name was registered. If a party registered a domain before another party’s trademark existed, the domain generally couldn’t have been registered to target that trademark holder.
But what happens if the domain is later acquired by another party? Here’s the scenario, as INTA explains it in its brief.
As an illustration, suppose Party A registers a domain name with its trademark but later transfers the domain name or abandons the mark and does not renew its domain name registration, allowing it to lapse. Party B adopts the mark, builds goodwill, and gains recognition. Party C then acquires the transferred or lapsed domain name without any
rights to the mark, intending only to extort Party B. Under the Ninth Circuit’s rule, Party B has no ACPA claim because Party A was the original registrant, and Party C’s bad-faith conduct is ignored.
There’s some nuance to INTA’s example that’s worth nitpicking: how did Party C obtain the domain? If it fully expired and it was later acquired, the registration was a new registration, and the date was reset. INTA’s issue seems to be if Party A never let the domain expire, but sold it to Party C (or an interim party), or it was auctioned off in a direct expired domain auction that didn’t reset the date.
Under ACPA, there is a split when the registration date is not officially reset.
The Ninth Circuit effectively treats the original registration date as the only registration under the ACPA. This would preclude Party B from succeeding on a claim.
Other circuits disagree, treating Party C’s acquisition as a new registration.
INTA wants the Supreme Court to settle this dispute by overturning the Ninth Circuit.
Comparing ACPA to UDRP
INTA believes that the ACPA should follow the Uniform Domain Name Dispute Resolution Policy (UDRP).
UDRP was designed to quickly settle trademark disputes without the case having to go to court, such as in an ACPA claim.
Under UDRP precedent, the panel considers when the current registrant obtained the domain name. In INTA’s scenario, the panel would consider the date Party C obtained the domain name, not when Party A registered it.
This pertains to the third prong of the UDRP, specifically whether the domain was registered and used in bad faith. Given the requirements of this prong, the UDRP precedent can make sense. If Party B has a trademark and Party C acquires a domain matching the trademark, and uses it in bad faith to target the trademark holder, a UDRP panel can order the domain transferred.
A common alternative scenario
The INTA example is only one narrow example, however. This raises another scenario: Party A registers a domain but never uses it. Party B comes along and adopts a trademark that matches the domain.
At this point, should Party A’s domain registration be encumbered?
This scenario plays out frequently. Party B doesn’t want to pay for Party A’s domain name. It files trademark applications and goes with an alternative domain name. Party B tells Party A that it will no longer be able to sell the domain to another party and uses this to try to extract a lower price.
The re-registration argument
INTA seems to be focusing on a specific case in which Party C acquires a domain to target Party B’s trademark. However, plaintiff counsel in ACPA cases often takes it a step further: they argue that a renewal of a domain name counts as a “re-registration” of the domain name.
Under this argument, even if Party A retained control of the domain names that matched Party B’s later trademark, every time Party A renewed the domain, it would reset the clock.
That’s the argument counsel made in two cases Domain Name Wire wrote about just this week. Looking beyond the general merits of the cases, both claim that the latest renewal of the domains should be the date considered as the registration date.
While INTA is concerned about the “major loophole [that] fosters a secondary market for bad-faith successive registrations of domain names that harms trademark owners,” lawyers who argue a mere renewal by the initial registrant is a fresh registration want to create their own loophole.
A stinker of the case
INTA filed its brief in an appeal over the domain name TRX.com. The case itself is problematic, and INTA notes that “INTA takes no position on whether the Respondent’s registration of trx.com was in bad faith and barred by the ACPA.”
The case involves a generic, three-letter domain that has significant value as an asset.
Loo Tze Ming bought the domain name trx.com for $138,000 in April 2022 at domain marketplace 4.cn.
In October 2022, Fitness Anywhere LLC, a company going through bankruptcy that claimed rights in TRX, filed a cybersquatting claim under UDRP. The following month, the panelist awarded the Complainant the domain name in a controversial decision.
Ming overlooked the dispute notice and didn’t respond, so he sued Fitness Anywhere in Arizona to stay the transfer. That case was stayed because Fitness Anywhere is in bankruptcy.
Then, JFXD TRX ACQ LLC, which described Fitness Anywhere as its predecessor in interest, did precisely what INTA said can happen with the circuit split: it tried to forum shop. It filed an in rem lawsuit against trx.com in Virginia, where the .com registry is based. Arizona is in the Ninth Circuit, and Virginia is in the Fourth Circuit, which could provide a more favorable reading of registration dates for JFXD.
Given the ongoing lawsuit in Arizona, it was odd that JFXD TRX filed an in rem suit against the domain name, as it knew who the domain owner was and how to contact him.
Ming successfully petitioned the court to move the in rem case to Arizona, where he filed his original lawsuit. That killed the case, because the court looked at the original 1999 registration date.
It’s not a great case for INTA to hang its hat on because there are other issues beyond Ninth Circuit precedent on dates. It’s a very generic domain, after all.
The district judge found many discrepancies in JFXD TRX’s arguments and found many of the filings unintelligible. (More details about those arguments and filings are here.) She not only ruled in favor of Ming, but also ruled that JFXD TRX should pay about $40,000 in attorney’s fees.
In a further twist, it appears that the original UDRP was likely filed under false pretenses. The UDRP was filed under the name Fitness Anywhere, but that company had already sold its trademarks before the UDRP was filed.
Which circuit is correct?
While the underlying case seems to have little merit, the circuit split does indeed create problems.
On the one hand, the Ninth Circuit does seem to leave a bit of a loophole when a domain is resold to a party with bad intentions.
On the other hand, a domain name shouldn’t be encumbered merely because another party adopts a trademark that matches it.
And certainly, a mere renewal of a domain name should not count as a new registration that resets the clock.
No one, not a soul, in the domain name registrar or registry business ever called a routine auto-renewal operation a “re-registration”. That is a term entirely invented by lawyers to steal domain names from people who registered them in good faith.
Agreed with JB, ESQ.
SCOTUS needs to bring an end to this -re-registration canard swiftly.
Domain pirates at best.