Trademark owners frustrated by cybersquatting will not be able to sue third-party service providers for contributory infringement, according to a new decision by the United States Ninth Circuit Court of Appeals. In its December 4, 2013, decision in Petronas v., the court held that the Malaysian oil and gas company Petroliam Nasional Berhard, owner of the trademark "PETRONAS," had no valid claim for contributory infringement against the world's largest registrar, GoDaddy.

Since 2007, GoDaddy has administered two domain names, and, not registered by Petroliam Nasional Berhard. The registrant, through GoDaddy's domain-forward service, directed the domains to resolve at an adult website. GoDaddy, when asked, declined to take any action and cited its obligations under the Uniform Domain Name Dispute Resolution Policy established by the Internet Corporation for Assigned Names and Numbers to stay out of trademark disputes over domain names.

Petroliam Nasional Berhard sued GoDaddy in a California federal court, claiming that the forwarding of the allegedly infringing domains constituted contributory infringement of the PETRONAS mark. The Ninth Circuit agreed with the trial court's dismissal of the claims. 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. 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." The appeals court held 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 for which Congress enacted the ACPA. This ruling will "spare neutral third-party service providers from divining the intent of their customers" in registering or redirecting domains, the court held, which would be a "nearly impossible task."