Ninth Circuit Holds There is No Cause of Action for Contributory Cybersquatting

Posted on December 12, 2013

Petroliam Nasional Berhad v.  (9th Cir. Dec. 4, 2013)

As our book speeds its way to the printer, the Ninth Circuit has made sure we will have a lot to discuss on this blog and in the upcoming supplement to Secondary Trademark Infringement.  Last week it held there is no cause of action for contributory cybersquatting under the ACPA, exercising the nuclear option on a body of case law that says such claims are valid when they involve fact patterns this sweeping decision ignores.

It was an unexpected development in an unlikely case  that involved a tenuous claim of cybersquatting, much less secondary liability for it: Petroliam Nasional Berhad v., where the plaintiff brought a contributory cybersquatting claim against the registrar GoDaddy for registering domain names containing its mark to others who used them to divert traffic to a pornographic Web site. The district court correctly dismissed the claim on a motion for summary judgment because the defendant had acted only in its capacity as a mere registrar whose domain name forwarding service would not subject it to contributory liability under the ACPA.  More to the point, the plaintiff failed to establish direct cybersquatting by the third-party registrants. As with traditional trademark infringement, there can be no contributory cybersquatting without direct cybersquatting, so the district court disposed of the claim without reaching the question of whether the Act allowed for it.

Courts in other cases had already recognized a cause of action for contributory cybersquatting.  But the defendants in those cases, as one court put it, did not “simply register a domain name and then go about [their] business.” They were complicit actors in complex cybersquatting schemes – not mere registrars like GoDaddy.  Acting as both registrars and registrants, the defendants in Verizon Cal. v. and Transamerica v. Moniker Online implicated themselves in the business of the direct cybersquatters, similar to corporate officer defendants who have been held contributorially liable by virtue of their familiarity with and participation in their companies’ infringing activities.

In fact, not all contributory cybersquatting defendants have even been registrars. In Microsoft v. Shah, the court allowed a contributory cybersquatting claim against a group of individuals and companies who sold their customers a cybersquatting “method” for profiting from the plaintiff’s marks. There the contributory claim was based on a theory of inducement.

Viewed against this backdrop of jurisprudence distinguishing mere registrars from complicit actors, the Ninth Circuit’s decision is hard to understand. The court simply declined to address the issues raised in cases like Verizon Cal. when it affirmed the district court’s grant of summary judgment in favor of GoDaddy.  Instead it said this:

Extending liability to registrars or other third parties who are not cybersquatters, but whose actions may have the effect of aiding such cybersquatting, would expand the range of conduct prohibited by the statute from a bad faith intent to cybersquat on a trademark to the mere maintenance of a domain name by a registrar, with or without a bad faith intent to profit.

2013 WL 6246460 at *3 (emphasis added).

None of the foregoing cases has even remotely suggested that secondary liability would extend to such “rote” activity as the “mere maintenance of a domain name.” In the much more relevant contexts where contributory liability presumably would lie, the courts have made clear that a cause of action for contributory cybersquatting would reach precisely the defendants whose conduct the Act was meant to prohibit  — those who are complicit actors in cybersquatting schemes.

For in-depth discussion of the topics in this post, including contributory cybersquatting, see Chapters 1, 3, 4, and 9 in Secondary Trademark Infringement, by Coleman and Price, to be published by Bloomberg BNA this month.


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