Last month, the Fourth Circuit issued a landmark intellectual property ruling in The Prudential Insurance Company of America v. Shenzhen Stone Network Information Ltd., No. 21-1823 (4th Cir. Jan. 24, 2023). The court decided that re-registrations of domain names are subject to the Anti-Cybersquatting Consumer Protection Act (ACPA) and that the time for determining jurisdiction against a domain name is when a cybersquatting claim is filed.

Here is a brief summary of the facts and reasoning behind the ruling and what the ruling means for trademark owners.

Factual background of the case

Frank Zhang, a Chinese citizen, bought the domain name PRU.com in October 2017 on behalf of a Chinese company, Shenzhen Stone Network Information Ltd. (SSN). SSN is a Chinese internet company that distributes foreign exchange (“forex”) financial and economic information to Chinese consumers online. Zhang is SSN’s CEO. Previously, Pru.com was registered to a third-party company based in Texas.

Once Zhang acquired the domain, it was never used to host substantive content. Instead, it displayed a GoDaddy parking page. The parking page also included automatically generated advertisements displaying Prudential’s trademarks as well as the marks of its competitors.

Prudential, a global insurance company, trademarked PRU and other PRU-formative marks in the United States and other countries (but not China) in 2002. In March 2020, Prudential learned that an unknown party owned the domain name PRU.com and offered to buy it, but SSN rejected the offer.

On March 25, 2020, Prudential filed an administrative action with the World Intellectual Property Organization (“WIPO”) under its Uniform Domain Name Dispute Resolution Policy (“UDRP”). Trademark owners can use this process to resolve disputes over the abusive registration of domain names without needing to file a lawsuit. Prudential again offered to buy the domain name, this time for $50,000. SSN rejected the offer, explaining that it planned to develop the name into a website covering foreign exchange news. However, to that date, no content had been uploaded to the site other than the GoDaddy parked page.

Prudential terminated the WIPO proceedings in May and filed a lawsuit in the Eastern District of Virginia against Zhang and the domain name PRU.com, alleging a bad faith registration of the domain name under the ACPA and trademark infringement under the Lanham Act.

Zhang filed a motion to dismiss for two reasons: (1) a lack of personal jurisdiction in Virginia, arguing that he was subject to jurisdiction in Arizona because of his GoDaddy registration, and (2) a lack of jurisdiction over the domain name because Prudential could identify a “suitable defendant” in Zhang. The district court dismissed the claims against Zhang for lack of personal jurisdiction but allowed the claims against the domain name to proceed because Zhang was not the proper defendant; SSN was, and as a Chinese company, it was not subject to U.S. courts’ jurisdiction.

Then Prudential filed a motion for summary judgment seeking the transfer of ownership of the domain name to Prudential. SSN filed a cross-motion for summary judgment seeking dismissal. The lower court granted summary judgment for Prudential on the cybersquatting claim, ordered SSN to transfer PRU.com to Prudential, and dismissed Prudential’s trademark infringement claim as moot. SSN filed an appeal with the Fourth Circuit.

Determining jurisdiction under ACPA

ACPA, which was designed to address cybersquatting, allows trademark owners to proceed against defendants misusing domain names in one of two ways:

1. If the cybersquatter is known: Filing an action against a defendant that registers or uses a domain name that is “identical or confusingly similar to or dilutive of” a distinctive or famous mark with the “bad faith intent to profit.”

2. If the cybersquatter is unknown: Filing an action against a domain name registered with the U.S. Patent and Trademark Office that infringes or dilutes a similar mark.

Here, the defendant challenged the court’s jurisdiction. The appellate court agreed with the district court that it had proper jurisdiction over the domain name because Zhang was not a “suitable defendant” under the ACPA. Zhang was not the actual registrant; SSN was. SSN never consented to personal jurisdiction in the United States, so there was no “suitable defendant,” and Prudential could pursue a claim against the domain name in Virginia because that’s where its registry is.

Next the court determined that the district court did not err in finding that the time for finding whether a plaintiff’s ability to obtain personal jurisdiction is at the time of filing. Analogizing the matter to the finding of jurisdiction, the court reasoned that “‘to conclude otherwise would allow any foreign defendant to choose their desired forum for litigation after being sued in an ACPA action.’”

Defining registration under ACPA

Next, the court turned to the issue of registration, a term that the ACPA does not define. SSN argued that if the initial domain is registered in good faith, that defeats an ACPA claim. It also argued that its re-registration of the domain name in 2017 was not a qualifying registration because the domain name was originally registered by a Texas company before that.

The Fourth Circuit joined the Third and Eleventh Circuits in finding that “registration” includes the initial registration as well as subsequent re-registrations. (Notably, the Ninth Circuit diverges from this view, and the Fourth Circuit found its viewpoint contrary to the purpose of the ACPA.) The court looked to the text of the statute, then to the dictionary to define registration. It concluded that “the ordinary meaning of the word ‘registers’ necessarily includes both the first registration and any subsequent re-registrations.” Without any language in the ACPA restricting “registration” to initial registrations, the court held that “the re-registration of a domain name is a registration for purposes of the ACPA.” The court further explained, “This interpretation furthers the ACPA’s purpose of eliminating cybersquatting and protecting American businesses, consumers, and online commerce.”

The merits of Prudential’s cybersquatting claim

The court found no dispute that PRU.com was confusingly similar to Prudential’s trademark “PRU.” The only remaining issue was whether SSN had the bad faith intent to profit from using PRU.com. Here, the appellate court again agreed with the district court that the factors supported the conclusion that SSN acted in bad faith. Moreover, SSN could not fulfill the ACPA’s safe harbor provision, because SSN could not show it reasonably believed its “use of the domain name was a fair use or otherwise lawful.”

The court did not credit SSN’s claim that it did not know of Prudential’s trademarks before March 2020, finding that “[a] company specializing in foreign exchange trading could not reasonably believe that a domain name identical to a stock ticker and a term trademarked in over 20 countries by a major financial services institution was lawful.” Further, SSN had registered “several hundred domain names” with GoDaddy and was required to confirm each time that its “registration of a domain name does not interfere with another’s intellectual property rights.” Finally, the court noticed that the parked website included a “Notice of Non-Affiliation” stating that “pru.com is not . . . in any way officially connected with [Prudential].”

The court then affirmed the district court’s grant of summary judgment to Prudential.

What the Prudential ruling means for trademark holders

The key takeaway from the court’s opinion is that any domain name registration after the initial registration can be grounds for legal action under the ACPA. Further, brands can continue suing domain names where they cannot otherwise sue an individual or company that registered an infringing domain name.

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