Daimlerchrysler v. The Net Inc., Keith Maydak Michael Sussman
Docket: 03-1950
Court: Court of Appeals for the Sixth Circuit; October 28, 2004; Federal Appellate Court
DaimlerChrysler filed a suit against defendants Keith Maydak and Michael Sussman under the Anti-Cybersquatting Consumer Protection Act (ACPA) due to their registration of the domain name "foradodge.com." The district court granted summary judgment in favor of DaimlerChrysler, ruling that the defendants violated the ACPA and issued a permanent injunction against them from using the "foradodge" name. The court ordered the transfer of the "foradodge.com" domain to DaimlerChrysler and dismissed the defendants' claims alleging a violation of the Fifth Amendment concerning unlawful taking.
DaimlerChrysler has used the DODGE trademark since 1924 and registered it since 1939, also utilizing a related toll-free number since 1994 and a corresponding domain name since 1995. Maydak, while imprisoned, instructed Sussman to register "foradodge.com" in December 1996, using the name of a non-existent corporation, The Net Inc., which was actually an unincorporated association between them. In addition to "foradodge.com," they also registered "foradodge.net" and numerous other domains similar to various trademarks and government entities. The "foradodge.com" domain was linked to a pornographic website from February 1998 to around October 1998. The appellate court affirmed the district court's decisions.
The district court's grant of summary judgment to the plaintiff on its Anti-Cybersquatting Consumer Protection Act (ACPA) claim is reviewed de novo. Summary judgment is appropriate when no genuine issue of material fact exists, allowing the moving party to prevail as a matter of law. To contest this, the non-moving party must present sufficient evidence for a jury to potentially favor them. The ACPA, enacted in 1999 as an amendment to the Lanham Act, targets "cybersquatting," which involves registering domain names that are identical or confusingly similar to well-known trademarks, with the intent to profit. For a trademark owner to succeed on an ACPA claim, they must demonstrate: 1) a valid trademark, 2) distinctiveness or fame of the mark, 3) similarity between the defendant's domain name and the owner's mark, and 4) bad faith intent by the defendant in using the domain name.
The defendants appeal the summary judgment based solely on two points: the district court's determination that the mark "4ADODGE" qualifies for trademark protection and that the defendants acted with bad faith in registering "foradodge.com". The district court evaluated whether the plaintiff's marks, "DODGE" and "4ADODGE," were entitled to protection under the Lanham Act, which defines a trademark as any identifier used to distinguish goods, regardless of registration. An unregistered mark can still receive protection under the ACPA, guided by principles applicable to registered marks. Registration is granted to trademarks that distinguish goods from those of others, subject to limited exceptions.
The district court confirmed the protection of the plaintiff's DODGE mark, which has been registered since 1939 and used continuously since 1924. This registration grants a presumption of validity, and the mark has become incontestable due to over five years of continuous use post-registration. The court evaluated the plaintiff's unregistered 4ADODGE mark, noting its use in marketing and as a toll-free number since 1994, as well as a website since 1995. The defendants argued that the 4ADODGE mark should not receive trademark protection, claiming it was used only as a phone number and website, unlike businesses that utilize such identifiers as names or slogans.
Despite potential factual disputes over the validity of the 4ADODGE mark, the district court found the defendants' domain name "foradodge.com" confusingly similar to the plaintiff's DODGE mark, as it incorporates the protected mark into a prepositional phrase. The court cited precedents indicating that domain names closely resembling registered trademarks could mislead consumers into believing they are associated with the trademark holder. The district court also noted that minor differences between domain names and trademarks are typically not sufficient to negate confusion.
The defendants did not contest this finding, which supported the initial elements of the plaintiff's ACPA claim. The next aspect to consider is whether the defendants registered the "foradodge.com" domain name with bad intent to profit, with the ACPA offering nine factors for evaluating such intent.
The document outlines several factors relevant to determining bad faith in the registration of the domain name "foradodge.com." Key points include:
1. **Intellectual Property Rights**: The defendants had no trademark or intellectual property rights in "foradodge" at the time of registration.
2. **Name Usage**: The domain name does not include any variation of the defendants' names and has not been used for a bona fide offering of goods or services.
3. **Commercial Intent**: The evidence suggests that the defendants intended to divert consumers from the plaintiff's site, as the domain name is phonetically identical to the plaintiff's mark "4ADODGE."
4. **Misleading Information**: The defendants provided false contact information during registration, listing a non-existent entity.
5. **Pattern of Conduct**: The defendants registered multiple domain names that are confusingly similar to others' trademarks, indicating a pattern of bad faith.
6. **Distinctiveness of the Mark**: "DODGE" is recognized as a distinctive and famous mark.
The district court concluded that the defendants acted with bad intent to profit from the domain registration, with all but one factor supporting this finding. The only neutral factor was related to an offer to sell the domain, which does not negate the overall conclusion. Thus, the court affirmed the summary judgment in favor of the plaintiff, indicating that a rational trier of fact could not find otherwise under the Anticybersquatting Consumer Protection Act (ACPA).
The defendants argue that the district court's injunction is overly broad, as it prohibits the use of terms like "DODGE," "4ADODGE," and "FORADODGE" in any form of business communication, including domain names. The review standard for a permanent injunction is abuse of discretion, and the court generally gives deference to the district court's decisions. The defendants assert that the injunction is excessive because it restricts the term "foradodge" beyond the domain name "foradodge.com," and claim that the plaintiff did not demonstrate any harm after their 1996 registration of the domain. However, the district court maintained that irreparable harm is presumed from trademark infringement, negating the defendants' argument. The court also clarified that a plaintiff can obtain a broader injunction to safeguard the goodwill associated with their marks. The defendants' ongoing claims to use "foradodge" and related domain names reinforced the appropriateness of the injunction's scope.
Additionally, the defendants challenged the district court's decision to strike their third-party complaint against the United States, alleging an unlawful taking under the ACPA if they lost the "foradodge.com" domain. The court ruled the complaint lacked merit, emphasizing that a regulatory taking occurs only when a property owner is denied permissible use, which is not applicable here since the defendants' domain name infringed on the plaintiff's trademark rights. The ACPA does not constitute a taking, as previous rulings have supported that injunctions requiring the relinquishment of infringing domain names are lawful and do not retroactively affect property rights.
The district court's ruling is affirmed on all grounds. The defendants attempted to introduce a fair use defense for the first time on appeal, which is considered waived due to their failure to raise it in the district court. The defendants also challenged the denial of their motion to compel further discovery, arguing that the current function of the 4ADODGE.com website, which merely redirects to DODGE.com, indicates that the plaintiff has abandoned the mark. The court found this argument unpersuasive, stating that routing traffic does not constitute abandonment. Additionally, even if abandonment were a valid claim, the court upheld the summary judgment in favor of the plaintiff, determining that "foradodge.com" is confusingly similar to the DODGE mark, which remains protected. The intentions of defendant Maydak to add goods or services to the site are irrelevant to the legal assessment. Lastly, the court rejected the defendants' claim that they could retain the "foradodge.com" domain with a disclaimer, citing that their use violates the Anticybersquatting Consumer Protection Act (ACPA), which allows for the transfer of domain names upon finding such violations.
