Brand owners have recently been given new weapons in the never-ending battle against cybersquatters. One court expanded the scope of brand owner enforcement by ordering what amounts to a self-policing mechanism. Another court refused to dismiss a “contributory cybersquatting” claim thus giving credence to a new cause of action. These decisions, described briefly below, reflect a new trend favoring brand owners and should be of great value in enforcement proceedings.

Brand Owners Given Increased Authority to Self-Police Cybersquatters

The North Face Apparel Corp. et al. v. Fujian Sharing Import & Export Ltd. et al, Civil Action No. 1:10-cv-01630 in the Southern District of New York, began as a routine counterfeiting and cybersquatting case to enjoin infringement and shut down hundreds of counterfeit and infringing domain names. After the defendants defaulted, Judge Hellerstein entered a default judgment which included, among other things, an order requiring the transfer of approximately 100 counterfeit websites to plaintiffs. The defendants failed to comply with Judge Hellerstein’s injunction and continued their operations through a slew of new infringing domains not specifically identified in the injunction.

The plaintiffs moved for contempt and noted the “whack a mole” problem that they and many other brand owners face when counterfeiters and infringers change domain names at the drop of a hat. In response, Judge Hellerstein issued a novel contempt order which included the following provisions:

  • plaintiffs are authorized to shut down newly discovered counterfeit websites owned or controlled by the defendants as they are identified, to transfer the domain names, and to confiscate any profits from the selling of counterfeit products on those websites without further court order;
  • infringing registries are required to temporarily disable the newly located domains after two days and then to transfer the domains to plaintiffs after an additional ten days;
  • an ISP which hosts one of the identified counterfeit websites owned or controlled by the defendants must deny access to the IP addresses utilized by those websites within three days of receiving notice of the order; and
  • “internet providers,” including ISPs as well as back-end service providers, web designers, sponsored search engine or ad-word providers, and any parties delegating IP addresses must also cease providing supplying services to the defendants within two days of receiving notice of the order.

By this contempt order, Judge Hellerstein obviated the need for the plaintiffs to continually bring new motions and seek new orders to address the cybersquatting problem—a welcome change for businesses that already devote significant time, money, and resources to battle counterfeiters and infringers.

Contributory Infringement Moves to Cyberspace

Although several litigants have tried to assert claims for contributory cybersquatting, none have succeeded—until now. Judge Ricardo Martinez recently refused to dismiss a claim for “contributory cybersquatting” filed by Microsoft in Microsoft Corp. v. Shah, Civil Action No. 2:10-cv-00653 in the Western District of Washington. The defendants filed a Rule 12(b)(6) motion arguing that “contributory cybersquatting” is not a recognized cause of action under the Anti-Cybersquatting Consumer Protection Act (“ACPA”). Microsoft alleged that the defendants induced others to engage in cybersquatting by providing instruction on how to misleadingly use Microsoft marks to increase website traffic and by enabling their software purchasers to easily create websites that feature Microsoft marks.

Judge Martinez determined that a contributory cybersquatting cause of action was appropriate in light of the defendants’ willful conduct and the ACPA's goal of imposing liability on those who seek to profit in bad faith from trademark owners. In declining the opportunity to dismiss the contributory cybersquatting cause of action, Judge Martinez asserted that these situations “reveal the relevance of the cause of action for contributory cybersqatting” and “[t]he ACPA should not be read so narrowly as to unduly constrain the protections the statute is meant to afford against cybersquatters.”

Other courts have refused to recognize this cause of action (e.g., Ford Motor Co. v., Civil Action No. 00-cv-71544), and the claim may ultimately fail. But for now, “contributory cybersquatting” is a viable claim, and, in the right case, it could be a very powerful asset for brand owners.