The federal Anticybersquatting Consumer Protection Act (ACPA) does not permit trademark owners to sue domain registrars for “contributory cybersquatting,” according to a recent ruling by the Ninth Circuit. The Ninth Circuit’s decision prevents trademark holders from obtaining damages related to cybersquatting from domain registrars under US law.

The Ninth Circuit reasoned that allowing a cause of action for contributory cybersquatting would defeat the ACPA’s goals.

At issue was a foreign third party’s use of defendant GoDaddy’s Internet registrar services to carry out the alleged cybersquatting. Plaintiff, the trademark owner, sued GoDaddy on the theory that GoDaddy was encouraging the third party’s bad-faith acts by maintaining the registration of the domain names and forwarding traffic from them.The district court granted summary judgment to GoDaddy. The Ninth Circuit affirmed.

The court of appeals first looked to the statu- tory text, which explicitly created two causes  of action: (i) a civil action against a person who “registers, traffics in, or uses a domain name” with a “bad-faith intent to profit from” a pro- tected trademark; and (ii) an in rem action for instances where the registrant is not personally available. The court concluded that “mainte- nance of a domain name by a registrar” did not constitute any of the prohibited acts.

In response to the plaintiff’s argument that the ACPA was enacted “against the backdrop of the common law of trademark infringement,” the court noted that the common law of trademarks did not provide a cause of action for cybers- quatting. Traditional trademark infringement has distinct elements from the ACPA’s cybers- quatting liability: the ACPA “does not require”the defendant to make “commercial use of” the plaintiff’s trademark (as is required for trade- mark infringement), but does require a plaintiff to “prove bad faith” on the part of the defendant (which is not required for trademark infringe- ment). The court therefore held that the ACPA created a distinct remedy that did not implicitly include a common law cause of action for con- tributory cybersquatting akin to contributory trademark infringement.

Finally, the Ninth Circuit reasoned that allow- ing a cause of action for contributory cyber- squatting would defeat the ACPA’s goals. The ACPA was created to be “a carefully and nar- rowly tailored” solution to a “specific problem” and narrowly defined the “use” of a domain name to limit the reach of the Act. The court noted that those district courts that recognized an indirect infringement cause of action under the ACPA had found it necessary to impose an                                                                              “exceptional circumstances” test before holding a registrar liable, but that such a limitation had no basis in the text of the ACPA. Furthermore, extending liability to registrars could require a registrar to evaluate millions of domain names to analyze the subjective intentions of each reg- istrant, and such potential liability could be used to pressure risk-adverse registrars to take down lawful domain names rather than risk a lawsuit.

In sum, the Ninth Circuit determined that there was no basis for an indirect cybersquatting cause of action, and that judicially creating such liability would undermine the legislative intent of the Act. In addition, trademark holders still have the option of proceeding in rem against offending domains registered by parties who are unavailable for suit.

The case is Petroliam Nasional Berhad v., Inc., 737 F.3d 546 (9th Cir. 2013).