DaimlerChrysler Corp v. Net Inc ( 2004 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 04a0368p.06
UNITED STATES COURTS OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiff-Appellee, -
DAIMLERCHRYSLER,
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No. 03-1950
v.
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THE NET INC., et al., -
Defendants, -
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Defendants-Appellants. -
KEITH MAYDAK; MICHAEL SUSSMAN,
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 98-74186—Paul D. Borman, District Judge.
Submitted: September 17, 2004
Decided and Filed: October 28, 2004
Before: KENNEDY and COOK, Circuit Judges; HOOD, District Judge.*
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COUNSEL
ON BRIEF: Keith Maydak, N. Versailles, Pennsylvania, Michael Sussman, N. Versailles, Pennsylvania,
pro se. George T. Schooff, Joshua B. Dobrowitsky, HARNESS, DICKEY & PIERCE, Troy, Michigan, for
Appellee.
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OPINION
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KENNEDY, Circuit Judge. Plaintiff DaimlerChrysler moved for summary judgment on its Anti-
Cybersquatting Consumer Protection Act (ACPA) claim, arguing that there was no genuine issue of material
fact with respect to whether the defendants violated the ACPA by their registration of the domain name
“foradodge.com.” The district court agreed and granted summary judgment to the plaintiff. The district
court also permanently enjoined the defendants from any further use of the “foradodge” name, ordered that
the “foradodge.com” domain name be transferred to the plaintiff, and struck the defendants’ third party
claims against the United States in which they alleged that the ACPA provided for an unlawful taking in
*
The Honorable Joseph M. Hood, United States District Judge for the Eastern District of Kentucky, sitting by designation.
1
No. 03-1950 DaimlerChrysler v. The Net Inc., et al. Page 2
violation of the Fifth Amendment to the United States Constitution. The defendants appeal from all of the
above holdings and orders of the district court. For the following reasons, we AFFIRM.
BACKGROUND
DaimlerChrysler manufactures, sells, and services automotive vehicles, service parts, repair parts,
and accessories for past and current automotive vehicles. DaimlerChrysler also licenses others to make and
sell models, replicas, and other items associated with its automobiles. Since 1924, DaimlerChrysler has
employed the DODGE mark to identify one or more of its products or services. In addition, the DODGE
mark has been registered as a trademark since 1939. As early as 1994, DaimlerChrysler advertised and used
as a toll free telephone number “1-800-4-A-DODGE.” In September 1995, DaimlerChrysler registered
the domain name 4ADODGE.com with Network Solutions, Inc. and established a website using the
4ADODGE domain name.
In late 1996, defendant Maydak, who was incarcerated in federal prison at the time, asked defendant
Michael Sussman to register the domain name “foradodge.com” for him. On December 25, 1996, Sussman
registered the domain name with Network Solutions Inc. Rather than using his or Maydak’s name as the
registrant, Sussman listed the registrant as The Net Inc. By the defendants’ own admission, however, there
is no such corporate entity; rather, The Net Inc. is an “unincorporated association” between defendants
Maydak and Sussman. In addition to registering “foradodge.com,” Maydak also registered the domain name
“foradodge.net.” Maydak claims that he planned to use the “foradodge.com” domain name to establish a
website that described his “dodging” services such as asset protection, tax and creditor avoidance, and ways
to bypass “society’s general paradigm.”
The defendants have not limited their registration of domain names to merely those that potentially
interfere with the DODGE mark. Rather, they have registered dozen of other domain names that are quite
similar to various other trademarks, including “altavistadigital.com,” “cnn.org,” “espnet.com,” “msnbc.org,”
“nasdaq.net,” “themicrosoftnetwork.com,” and “ups.net,” among others. Moreover, the defendants have
registered domain names that are substantially similar to various United States governmental institutions,
agencies, and departments, including “doj.com,” “fda.com,” “nasa.net,” “nasa.org,” and
“www.whitehouse.com,” among others.
From at least February 1998, and possibly as early as December 1996, to about October 1998, the
defendants pointed the “foradodge.com” domain name to a website that contained a link to a pornographic
website.
ANALYSIS
I. We first consider whether the district court erred in granting summary judgment to the plaintiff on
its ACPA claim.
We review a grant of summary judgment de novo. Wiley v. United States, 20 F.3d 222, 224 (6th Cir.
1994). Summary judgment may be granted “if pleadings, depositions, answers to interrogatories, and
admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(C). To create a
genuine issue of a material fact, however, the non-movant must do more than present some evidence on a
disputed issue. As the Supreme Court has noted, “[t]here is no issue for trial unless there is sufficient
evidence favoring the non moving party for a jury to return a verdict for that party. If the [non-movant’s]
evidence is merely colorable, or is not significantly probative, judgment may be granted.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242 (1986).
In 1999, Congress passed the ACPA as an amendment to the Trademark Act of 1946 (“Lanham
Act”) to prohibit “cybersquatting.” As the district court noted, “cybersquatting” occurs when a person other
than the trademark holder registers the domain name of a well known trademark and then attempts to profit
No. 03-1950 DaimlerChrysler v. The Net Inc., et al. Page 3
from this by either ransoming the domain name back to the trademark holder or by using the domain name
to divert business from the trademark holder to the domain name holder. See Sporty’s Farm L.L.C. v.
Sportsman’s Market, Inc., 202 F.3d 489 493 (2d Cir. 2000). A trademark owner asserting a claim under the
ACPA must establish the following: (1) it has a valid trademark entitled to protection; (2) its mark is
distinctive or famous; (3) the defendant’s domain name is identical or confusingly similar to, or in the case
of famous marks, dilutive of, the owner’s mark; and (4) the defendant used, registered, or trafficked in the
domain name (5) with a bad faith intent to profit. Ford Motor Co. v. Catalanotte, 342 F.3d 543, 546 (6th
Cir. 2003).
Because the defendants appeal from the district court’s grant of summary judgment only on the
grounds that the district court erred when it found that 1) the mark 4ADODGE qualifies as a protected
trademark under the ACPA, and 2) the defendants had a bad faith intent to profit when it registered the
“foradodge.com” domain name, we need only consider these two arguments, which implicate the first and
fifth elements necessary to establish an ACPA claim.1
The district court first considered whether plaintiff’s DODGE and 4ADODGE marks were entitled
to trademark protection. Under the Lanham Act, a trademark is defined as “any word, name, symbol, or
device, or any combination thereof . . . used by a person . . . to identify and distinguish his or her goods,
including a unique product from those manufactured or sold by others and to indicate the source of goods,
even if that source is unknown.” 15 U.S.C. § 1127. A trademark need not be registered to be entitled to
protection under the ACPA. See Wal-Mart Stores, Inc. v. Samara Bros., 529 U.S. 205, 209 (2000); Two
Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992). Rather, “the general principles qualifying a
mark for registration under [the act] are for the most part applicable in determining whether an unregistered
mark is entitled to protection.” Two Pesos, 505 U.S. at 768. The provision governing registration under
the act “requires that registration be granted to any trademark ‘by which the goods of the applicant may be
distinguished from the goods of others’ - subject to various limited exceptions.” Wal-Mart Stores, 529 U.S.
at 211 (quoting 15 U.S.C. § 1052).
The district court noted that there is no dispute that plaintiff’s DODGE mark is entitled to protection.
The DODGE mark has been registered since 1939 and has been in continuous use since 1924. The district
court also noted that the plaintiff’s registration of the mark entitled it to a presumption that the mark is valid,
and that the continuous use of the mark for over five years after registration renders the mark incontestable.
See id. at 209. The district court then considered whether the plaintiff’s 4ADODGE mark, although not
registered, is entitled to trademark protection under the ACPA. The district court noted the following:
This mark, which incorporates plaintiff’s incontestable DODGE mark, has been used by the
plaintiff to distinguish its automobiles for a number of years. As early as 1994, plaintiff
advertised and used as a toll free telephone number 1-800-4-A-DODGE. Plaintiff has also
used the 4ADODGE.COM website since 1995.
The defendants allege that 4ADODGE is not entitled to protection as a trademark because the
plaintiff merely uses the mark in a telephone number and as a website. Unlike companies such as 1-800-
Flowers, the defendants contend, the plaintiff does not use its telephone number or website address as
a business name or slogan, and thus it should not receive protection as a trademark.
Even if there were a genuine issue of material fact as to whether the plaintiff has a valid
trademark in 4ADODGE, the district court also concluded that the defendants’ “foradodge.com” domain
name was confusingly similar to the plaintiff’s distinctive and famous DODGE mark. The district court
noted that the “foradodge” domain name simply incorporates plaintiff’s protected mark into a
1
The defendants assert for the first time in this appeal the defense that they “believed and had reasonable grounds to believe
that the use of the domain name was a fair use or otherwise lawful.” 15 U.S.C. § 1125(d)(1)(B)(ii). Because the defendants never
raised this defense to the district court, we consider it waived. Brindley v. McCullen, 61 F.3d 507, 509 (6th Cir. 1995).
No. 03-1950 DaimlerChrysler v. The Net Inc., et al. Page 4
prepositional phrase. “Courts generally have held that a domain name that incorporates a trademark is
‘confusingly similar to’ that mark if ‘consumers might think that [the domain name] is used, approved,
or permitted’ by the mark holder.” Ford Motor Co. v. Greatdomains.com, Inc., 177 F. Supp. 2d 635,
641 (E.D. Mich. 2001) (quoting Harrods Ltd. v. Sixty Internet Domain Names, 157 F. Supp. 2d 658, 677
(E.D. Va. 2001)). Moreover, courts have consistently “found that slight differences between domain
names and registered marks, such as the addition of minor or generic words to the disputed domain
names are irrelevant.” Ford Motor, 177 F. Supp. 2d at 641 (internal quotations omitted) (holding that
marks incorporated into the domain names “4fordparts.com,” “jaguarcenter.com,” and “volvoguy.com”
were confusingly similar to the marks FORD, JAGUAR, and VOLVO); See also Spear, Leeds, &
Kellogg v. Rosado, 122 F. Supp. 2d 403, 406 (S.D.N.Y. 2000) (finding that domain names that combined
the “Redi” mark with generic or descriptive terms were confusingly similar to the plaintiff’s trademark).
Thus, the district court concluded, defendants’ “foradodge.com” domain name is confusingly similar
to plaintiff’s protected DODGE mark. The defendants did not appeal this conclusion, which
independently2 supports the district court’s finding with respect to the first four elements of the plaintiff’s
ACPA claim.
Next, we consider the fifth element of the ACPA claim, whether the defendants registered the
“foradodge.com” domain name with a “bad intent to profit.” The ACPA provides a list of nine non-
exclusive factors that a court may consider in determining whether a bad faith intent to profit is
established. 15 U.S.C. § 1125(d)(1)(B)(i). They are as follows:
(I) the trademark or other intellectual property rights of the person, if any, in the domain
name;
(II) the extent to which the domain name consists of the legal name of the person or a name
that is otherwise commonly used to identify that person;
(III) the person’s prior use, if any, of the domain name in connection with the bona fide
offering of any goods or services;
(IV) the person’s bona fide noncommercial or fair use of the mark in a site accessible under
the domain name;
(V) the person’s intent to divert consumers from the mark owner’s online location to a site
accessible under the domain name that could harm the goodwill represented by the mark,
either for commercial gain or with the intent to tarnish or disparage the mark, by creating
a likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the
site;
(VI) the person’s offer to transfer, sell, or otherwise assign the domain name to the mark
owner or any third party for financial gain without having used, or having an intent to
use, the domain name in the bona fide offering of any goods or services, or the person’s
prior conduct indicating a pattern of such conduct;
(VII) the person’s provision of material and misleading false contact information when
applying for registration of the domain name, the person’s intentional failure to maintain
2
The defendants also appeal from the district court’s denial of their motion to compel further discovery. The defendants
contend that they are entitled to further discovery because the 4ADODGE.com website now merely transfers users to the
DODGE.com website. This evidences, the defendants argue, that the plaintiff has abandoned the 4ADODGE.com mark. The
fact that the plaintiff routes internet traffic directly to its DODGE.com site is hardly evidence of abandonment. Nonetheless, even
if it were, the denial of the motion to compel discovery was appropriate because the district court has also concluded that the
plaintiff is entitled to summary judgment on the ground that “foradodge.com” site is confusingly similar to the DODGE mark,
which assuredly has not been abandoned.
No. 03-1950 DaimlerChrysler v. The Net Inc., et al. Page 5
accurate contact information, or the person’s prior conduct indicating a pattern of such
conduct;
(VIII) the person’s registration or acquisition of multiple domain names which the person
knows are identical or confusingly similar to marks of others that are distinctive at the
time of registration of such domain names, or dilutive of famous marks of others that are
famous at the time of registration of such domain names, without regard to the goods or
services of the parties; and
(IX) the extent to which the mark incorporated in the person’s domain name registration is
or is not distinctive and famous within the meaning of [the act].
Considering the factors in their entirety, the district court concluded that it is clear that the
defendants registered the “foradodge.com” domain name with a bad intent to profit. We agree.
All but one of the enumerated factors above support a finding of bad faith. Factor six, which
asks whether the person offered to sell the domain name to the mark owner for financial gain, is neutral,
as the plaintiff presented evidence that defendant Sussman offered to sell the domain name to it for
$30,000 while Sussman avers that it was plaintiff’s agent who initially sought to buy the domain name.
Although there is a genuine issue of fact on this point, that does not defeat plaintiff’s summary judgment
since, when considering the factors in their entirety, no reasonable trier of fact could conclude that the
defendants did not act in bad faith with intent to profit. After considering the remaining factors, this
conclusion is inescapable. For instance, 1) the defendants had no intellectual property rights in the
“foradodge” name at the time of registration; 2) the domain name does not contain any variation of the
names of the defendants; 3) the defendants have never actually used the site in connection with the bona
fide offer of goods or services;3 4) the defendants never claim that they used the site for any
noncommercial or other “fair use;” 5) it can be inferred that the defendants intended to divert customers
from the plaintiff’s website from the fact that the defendants’ “foradodge” domain name is phonetically
identical to plaintiff’s 4ADODGE mark; 6) the defendants provided misleading contact information as
the site’s registrant, initially listing the registrant as The Net Inc., of Hewlett, New York, while no such
entity exists; 7) the defendants registered multiple sites, such as doj.com, espnet.com, ups.net, which
are confusingly similar to names and marks of others; and finally 8) DODGE is a highly distinctive and
famous mark.
Accordingly, since we conclude that no rational trier of fact could find that the defendants did
not violate the ACPA, we affirm the district court’s grant of summary judgment to the plaintiff.4
II. We next consider the defendants’ argument that the scope of the injunction granted by the district
court was overly broad. The injunction prohibits the defendants from, inter alia, “using or displaying
DODGE, 4ADODGE, ... or colorable imitations thereof including but not limited to FORADODGE, as
a business name, domain name or mark in any ... advertisement, ... or in any other communication.”
The grant of a permanent injunction is reviewed for abuse of discretion, giving “great deference
to the decision of the district court.” PACCAR Inc., v. Telescan Techs, L.L.C., 319 F.3d 243, 249 (6th
3
It is irrelevant that defendant Maydak states that he intends to add bona fide goods or services to the site eventually since
the factor asks whether the domain name holder has actually used the site in connection with the offer of goods or services, not
whether the domain holder intends to do so.
4
The defendants also appeal the district court’s decision to transfer the “foradodge.com” domain name to the plaintiffs
because, they contend, the plaintiff will not suffer any harm if they retain the domain name while providing a disclaimer that their
site is not associated with the plaintiff. However, the defendants’ have no right to use the domain name “foradodge.com” since
the use violates the ACPA. Moreover, the ACPA explicitly authorizes courts to transfer a domain name after finding an ACPA
violation. See 15 U.S.C. § 1125(d)(1)(C).
No. 03-1950 DaimlerChrysler v. The Net Inc., et al. Page 6
Cir. 2003). Only in the rarest of circumstances will the district court’s balancing of the equities be
disturbed. See Moltan v. Eagle-Picher Indus., 55 F.3d 1171, 1175 (6th Cir. 1995).
The defendants contend that the scope of the injunction is overly broad because it not only
prohibits them from using the domain name “foradodge.com,” but also prohibits them from any use of
the term “foradodge.” The defendants also argue that the injunction is overly broad because, they
contend, the plaintiff failed to show that it suffered any harm after they registered the “foradodge.com”
domain name in 1996. However, as the district court correctly noted, “irreparable harm is presumed
form defendants infringement of plaintiff’s mark, and thus this argument does not provide a basis for
narrowing the scope of injunctive relief.” See Circuit City Stores Inc. v. Carmax, Inc., 165 F.3d 1047,
1065 (6th Cir. 1999) (explaining that a court need only find that a defendant is liable for infringement
for it to award injunctive relief, an element of which is irreparable harm to the plaintiff). The defendant
also complains that the injunction enjoins activity outside the scope of the plaintiff’s ACPA claim.
However, as the district court again correctly observed, a plaintiff is entitled to an injunction that is
somewhat broader than the scope of its ACPA claim in order to protect the reputation and goodwill it
has established in its marks and to prevent defendants from infringing on, or otherwise harming, those
marks. In this case, defendant Maydak continued to assert throughout the proceedings that he was
entitled to use the “foradodge.com” domain name; he sought to register “foradodge” with the United
States Trademark Office; and he registered to himself the “foradodge.us” domain name after this action
was filed. Under these circumstances, the scope of the injunction issued by the district court was
entirely appropriate.
III. Finally, we consider the defendants argument that the district court improperly struck their third
party complaint against the Untied States in which they alleged that the ACPA provides for an unlawful
taking without just compensation in the event they lost the “foradodge.com” domain name. The district
court properly struck the third party complaint against the United States as the complaint is without
merit and fails as a matter of law. “A regulatory taking occurs when the Government prevents a
[property] owner from making a particular use of the property that otherwise would be permissible.”
McKay v. United States, 199 F.3d 1376, 1382 (Fed. Cir. 1999) (emphasis added). As the district court
noted, the defendants’ use of a domain name that infringes the plaintiff’s trademark is not otherwise
permissible. Thus, the ACPA does not effect a taking. See Sporty’s Farm, 202 F.3d at 502 (holding that
an injunction requiring the defendant to relinquish a domain name it registered because the defendant’s
registration of the domain name violated the ACPA was not impermissibly retroactive since the
injunction provided only prospective relief); See also E. & J. Gallo Winery v. Spider Webs Ltd., 129
F. Supp. 2d 1033, 1047 (S.D. Tex. 2001) (finding no basis to hold that the ACPA provides for an
unlawful taking and deprivation of property); Shields v. Zuccarini, 89 F. Supp. 2d 634, 642 (E.D. Pa.
2000) (holding that the defendant failed to show that the ACPA countenances an unconstitutional
“taking” by a nongovernmental actor).
CONCLUSION
For the reasons stated above, we AFFIRM the district court on all the grounds raised.