Ford Motor Company v. Peter Catalanotte

Citations: 342 F.3d 543; 20 I.E.R. Cas. (BNA) 545; 68 U.S.P.Q. 2d (BNA) 1050; 2003 U.S. App. LEXIS 17960; 2003 WL 22020036Docket: 02-1237

Court: Court of Appeals for the Sixth Circuit; August 28, 2003; Federal Appellate Court

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Peter Catalanotte appeals a district court ruling that awarded Ford Motor Company $5,000 in statutory damages under the Anticybersquatting Consumer Protection Act (ACPA). The case, adjudicated in the United States Court of Appeals for the Sixth Circuit, involved Catalanotte's registration of the domain name FORDWORLD.COM on January 21, 1997, while he was a Ford employee. Despite knowing Ford had an employee publication named Ford World, Catalanotte never utilized the domain for a website. Ford became aware of the registration in October 2000, when Catalanotte sent an email to Ford executives claiming he had received offers for the domain, which was untrue. Additionally, Catalanotte had registered other domains, AANDE.COM and MRSPAULS.COM, which he sold without operating associated websites. 

Ford filed its complaint on November 30, 2000, alleging cyberpiracy, trademark dilution, trademark infringement, and false designation of origin. The district court found Catalanotte liable under the ACPA and granted Ford injunctive relief along with the statutory damages. The appellate court affirmed the district court's decision, noting that it would uphold factual findings unless clearly erroneous, while legal issues would be reviewed de novo. The ACPA, enacted in 1999, addresses the registration of domain names that are identical or confusingly similar to trademarks and requires a showing of bad faith intent to profit, with specific factors outlined for determining such intent.

The ACPA allows for injunctive relief and recovery of actual damages, as well as statutory damages ranging from $1,000 to $100,000 per domain name, subject to court approval. However, actual and statutory damages are not available for actions related to a domain name that occurred before the ACPA’s enactment. In this case, the district court granted Ford injunctive relief and $5,000 in statutory damages because Catalanotte engaged in trafficking the domain FORDWORLD.COM by offering to sell it to Ford after the ACPA's enactment. Catalanotte contends that he should not be liable for statutory damages due to registering the domain before the ACPA was enacted, while Ford argues that although Catalanotte is not liable for the registration damages, he can be held accountable for trafficking that occurred post-enactment. The ACPA’s Effective Date provision clarifies that while registration, trafficking, or use of domain names registered before the Act cannot incur damages, those actions can still lead to liability if they occur after enactment. The district court's decision to award damages was limited to Catalanotte's actions after the ACPA's enactment, affirming that previous registration does not shield him from liability for subsequent trafficking.

Catalanotte's argument that the Anticybersquatting Consumer Protection Act (ACPA) prevents liability for domain names registered before its enactment is unsupported by case law. In *People for the Ethical Treatment of Animals v. Doughney*, the court noted that the ACPA applies retroactively but could not award damages since the defendant's use of the domain occurred entirely before the ACPA was enacted. Similarly, in *Sporty's Farm L.L.C. v. Sportsman's Market, Inc.*, the court found that damages were unavailable because the infringing party did not use the domain after the ACPA's enactment. However, Catalanotte's case differs as he used the domain FORDWORLD.COM after the ACPA's enactment by offering it for sale in October 2000. Several cases indicate that liability for damages under the ACPA is possible for post-enactment use of pre-enactment registered domain names. Courts like in *E. J. Gallo Winery v. Spider Webs Ltd.* and *Shields v. Zuccarini* confirmed that continued use after the ACPA’s effective date subjects individuals to the statute's penalties. Therefore, the argument that the ACPA bars damages for domain names registered before its enactment but trafficked after is rejected, as the Act allows liability based on post-enactment trafficking regardless of the registration date.

Catalanotte registered the domain name FORDWORLD.COM on January 21, 1997, prior to the enactment of the Anticybersquatting Consumer Protection Act (ACPA) on November 29, 1999. He claims that he did not use or traffic in the domain after this date and intended to gift it to Ford. However, the district court found that Catalanotte offered the domain for sale, evidenced by an email to Ford executives asserting the domain was "for sale" and indicating he had received other offers. Catalanotte does not dispute the court's factual findings, which leads to the rejection of his claim that the offer was a gift.

Catalanotte's assertion that he did not traffic in the domain because he merely made an offer, rather than completing a sale, is also dismissed. The ACPA defines "trafficking" broadly, including offers for sale, and the court concluded that Catalanotte's actions constituted trafficking as they aligned with the ACPA's intent to combat bad faith registrations of famous trademarks. Hence, his offer to sell the domain to Ford qualifies as trafficking under the ACPA, contrary to his claims, which the court determined reflected bad faith.

Catalanotte claims he did not use the domain name FORDWORLD.COM after November 29, 1999, asserting that the district court incorrectly found he operated a website associated with it. However, the district court ruled that Catalanotte used and trafficked in the domain when he offered it for sale to Ford on October 27, 2001. Catalanotte argues that the terms 'traffics in' and 'uses' in the ACPA (15 U.S.C. § 1125(d)(1)(A)(ii)) should be interpreted as distinct, suggesting Congress intended separate meanings. Ford contends that Catalanotte's actions, including warehousing the domain and his sale offer, qualify as use under the ACPA. The court decided that it need not clarify the terms' meanings, as the statutory damages awarded were based solely on Catalanotte's offer to sell the domain, which constituted trafficking. 

Regarding the statute of limitations, Catalanotte argues that Ford's ACPA claim should be dismissed on these grounds, suggesting a three-year limit based on Michigan law. Ford counters that laches, an equitable doctrine, applies instead, noting that it filed suit shortly after discovering Catalanotte's registration of the domain. Catalanotte registered FORDWORLD.COM on January 21, 1997, and offered it to Ford on October 27, 2000, with Ford filing its complaint on November 30, 2000. Catalanotte's assertion relies on an inapplicable statute of limitations for Lanham Act claims; courts have consistently applied laches to such cases, not state limitations. Laches considers the inequity of enforcing a claim rather than merely the passage of time, emphasizing that it governs claims enforcing equitable rights created by Congress.

A presumption of laches indicates that an action is barred if not initiated within the relevant state statute of limitations, which is three years in this case. To assert laches, two elements must be demonstrated: 1) lack of diligence by the party against whom the defense is raised, and 2) prejudice to the party asserting it. The determination of diligence often hinges on a party's awareness of rights infringement. Ford first became aware of Catalanotte's registration of FORDWORLD.COM on October 27, 2000, when offered the domain for sale, and subsequently filed a lawsuit on November 30, 2000, indicating diligence in protecting its rights. Additionally, the district court found that Catalanotte did not detrimentally rely on Ford's inaction regarding the domain name, meaning he was not prejudiced by the timing of the lawsuit. Consequently, Ford's ACPA claim is not barred by laches, leading to the affirmation of the district court's award of $5,000 in statutory damages to Ford. Judge Algenon L. Marbley participated in this decision.