Petronas v. GoDaddy.com: No Contributory Liability for Cybersquatting Under the ACPA
In a case involving the Anti-Cybersquatting Consumer Protection Act (the ACPA), the Ninth Circuit Court agreed with a lower court’s decision that the ACPA does not provide a cause of action for contributory cybersquatting. Under the ACPA, cybersquatting is defined as registering, trafficking, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else. Typically, the perpetrator or cybersquatter offers to sell the domain to the person or company who owns the related trademark- essentially blackmailing the trademark owner into purchasing the domain.
Petronas, a major oil and gas company located in Kuala Lumpur, Malaysia, sued GoDaddy, the world’s largest domain name registrar. The case was filed after a third party registered the domain names “petronastower.net” and “petronastowers.net” and then used GoDaddy’s domain name forwarding service to direct the disputed domain names to an adult entertainment web site. Upon discovering the domains obtained by the third party, Petronas filed two in rem actions against both domains; the court granted Petronas ownership of each. However, Petronas also filed suit against GoDaddy in the Northern District of California. Specifically, Petronas asserted contributory liability against GoDaddy for the third party’s cybersquatting. Both Petronas and GoDaddy moved for summary judgment on this claim- GoDaddy prevailed, and Petronas appealed.
In reaching its decision that the ACPA does not provide for contributory liability, the court stated that 1)
the text of the ACPA does not expressly provide for secondary liability, and 2) unlike the Lanham Act which incorporated the common law of trademarks, the ACPA created a new cause of action. Therefore, the court reasoned that common law doctrines of contributory liability were not intended to be part of the ACPA.
The court also held that finding a cause of action for contributory cybersquatting would not further the goals of the statute. The court reasoned that allowing contributory liability as a secondary cause of action would essentially require an impossible task from these service providers- they would have to read their customer’s minds to figure out their intent in registering a particular domain. In the court’s own words:
[quote align=”justify” color=”#999999″]“Because direct cybersquatting requires subjective bad faith, focusing on direct liability also spares neutral third party service providers from having to divine the intent of their customers. In order for a service provider like GoDaddy, with clients holding over 50 million domain names, to avoid contributory liability, it would presumably have to analyze its customer’s subjective intent with respect to each domain name… [d]espite that nearly impossible task, service providers would then be forced to inject themselves into trademark and domain name disputes.”[/quote]
Since neither the plain text nor the purpose of the ACPA provided support for a cause of action for contributory cybersquatting, the court held that the ACPA created a new and distinct cause of action, and Congress did not incorporate the common law of trademark, including contributory infringement, into the ACPA.
Read the Opinion here.
JAFARI LAW GROUP®, INC.