The Western District of Washington is allowing the Microsoft Corporation to move forward with claims for contributory cybersquatting under the Anti-Cybersquatting Protection Act (ACPA) and contributory dilution under the Lanham Act. In an order denying the defendants’ motion to dismiss Microsoft’s claims, the court stated that causes of action for contributory cybersquatting and contributory dilution had never been directly addressed by statute or appellate courts.

As the basis for its claims for contributory cybersquatting and contributory dilution, Microsoft alleges that the defendants, Amish Shah, Jose Rivera, Digispace Solutions LLC and YMultimedia LLC, sold software that allowed users to create domain names incorporating Microsoft marks. In their motion to dismiss, the defendants argued that claims for contributory cybersquatting and contributory dilution are not recognized.

Under the ACPA, 15 U.S.C. § 1125(d)(1), a plaintiff must show that “(1) the defendant registered, trafficked in, or used a domain name; (2) the domain name is confusingly similar to a protected mark owned by the plaintiff; and (3) the defendant acted with ‘bad faith intent to profit from that mark.’” The “bad faith” requirement is nearly always the most difficult element to show in a claim under the ACPA.

Here, the court first noted the well-established doctrine of contributory liability for trademark infringement. The court then reasoned that because the intent of the ACPA is to prevent bad-faith use of a mark in a domain name, the defendants’ alleged conduct “falls squarely within the statutes’ goal of imposing liability on those who seek to profit in bad faith by means of registering, trafficking, or using domain names that contain identical or confusingly similar marks” and held that the ACPA should not be read so narrowly as to insulate the defendants from liability for their alleged conduct.

The Lanham Act provides a cause of action for dilution under the Trademark Dilution Act, 15 U.S.C. § 1125(c). Dilution is generally defined as a blurring or tarnishment of a famous mark. Blurring of a famous mark occurs where a defendants’ use causes the connection between the mark and the goods with which the mark is used to be weakened in the minds of consumers. Tarnishment occurs where a defendant uses the famous mark in an unwholesome manner or in connection with inferior goods. The court stated that, like contributory cybersquatting, contributory dilution “is a tort-like cause of action which naturally lends itself to the theory of contributory liability.” Similarly to its reasoning on the contributory cybersquatting claim, the court reasoned that the intent of the Trademark Dilution Act is to prevent the exact type of harm, blurring or tarnishing of a famous mark, alleged by Microsoft.

In short, the court denied the defendants’ motion to dismiss based on the legislative intent of Congress in enacting the ACPA and the Trademark Dilution Act. The holding gives trademark holders two additional causes of action with which to go after cybersquatters. Given the ever-expanding list of domain name extensions (.com, .net, etc.), and the associated increase in opportunities for cybersquatters, the court’s order is at least a small victory for trademark owners in the battle for cyberspace.