Third-Party Service Providers Not Liable for Contributory Trademark Infringement

by Holland & Knight LLP
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Trademark owners frustrated by cybersquatting will not be able to sue third-party service providers for contributory infringement, according to a decision by the U.S. Court of Appeals for the Ninth Circuit.

The court rejected a lawsuit filed by a foreign energy company against GoDaddy.com, the largest domain-name registrar in the world. In its December 4, 2013 decision in Petronas v. GoDaddy.com, the Ninth Circuit agreed with the trial court that the Malaysian oil and gas company Petroliam Nasional Berhard, owner of the trademark "PETRONAS," had no valid claim for contributory infringement against the registrar.

Background

Since 2007, GoDaddy has administered two domain names — "petronastower.net" and "petronastowers.net" — that had been registered by someone other than Petroliam Nasional Berhard. The registrant, through GoDaddy's domain-forward service, directed the domains to resolve at an adult website. When the energy company contacted GoDaddy, the registrar declined to take any action.

GoDaddy noted that under the Uniform Domain Name Dispute Resolution Policy established by the Internet Corporation for Assigned Names and Numbers (ICANN), it is prohibited from participating in trademark disputes over domain names. ICANN is the private nonprofit responsible for assigning blocks of Internet domain addresses to registries, which in turn make the blocks available for registration through registrars such as GoDaddy. The organizations that manage the Internet operate under a series of protocols established with ICANN.

The GoDaddy Litigation

Petroliam Nasional Berhard sued GoDaddy in federal court in Northern California claiming that the forwarding of the allegedly infringing domains constituted contributory infringement of the PETRONAS mark. The trial court ruled in GoDaddy's favor and dismissed the claim.

On appeal, the Ninth Circuit agreed with the trial court. The appeals court primarily looked to the Anticybersquatting Consumer Protection Act (ACPA), which Congress enacted in 1999 to create a mechanism to combat infringing domain names. The ACPA provides for damages and injunction claims against anyone who "has a bad faith intent to profit from" another person's trademark "and registers, traffics in, or uses a [protected] domain name." In the ACPA, Congress also created a claim that permits a trademark owner to take control over an infringing domain name.

The Malaysian energy company urged the court to read into ACPA a claim against registrars if their conduct arguably contributes to the cybersquatters' infringement. The Ninth Circuit refused. According to the court, nothing in the plain language of ACPA or in the circumstances surrounding its enactment supports a claim of contributory conduct against registrars. Rather, the statute only reaches a narrowly defined defendant who "uses" a domain name.

To the court, expanding liability to registrars would "seriously undermine" the limited purposes Congress enacted ACPA to address. The court also said that its ruling would "spare neutral third party services providers from divining the intent of their customers" in registering or redirecting domains.

It noted that with 50 million registered domain names under its administration, GoDaddy would be faced with a "nearly impossible task" of determining which registrants had acted in bad faith in violation of the law.

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