The opinion of the court was delivered by: Owen, District Judge.
Before me in this in rem proceeding under the recently enacted
Anticybersquatting Consumer Protection Act (ACPA) are plaintiff
BroadBridge Media's order to show cause for a preliminary
injunction continuing the transfer of the domain name
<hypercd.com> from Barry Henderson to plaintiff, earlier ordered
on a TRO, and Henderson's cross motion to dismiss for lack of
jurisdiction or failure to state a claim. I find jurisdiction,
deny Henderson's motion to dismiss, and grant plaintiff's motion,
and direct Register.com to maintain the registration of
<hypercd.com> in the plaintiff's name.
Since 1996, BroadBridge and its predecessors, in connection
with its business, have distributed over 4,500,000 compact discs
bearing the mark HyperCD and the domain name <hypercd.com>. (Park
¶ 5). BroadBridge's predecessor in interest registered HyperCD as
a trademark with the United States Patent and Trademark Office on
September 17, 1997, and received Federal Registration No.
2,098,352. (Id. ¶ 4, Exs. A, B). Plaintiff under this trademark
promotes technology which converts and "compresses" analog audio
information into digital information and "burns" this information
onto a compact disc ("CD"). (Id. ¶ 3). Under this trademark,
plaintiff also promotes its technology which allows its clients'
customers to access additional features embedded in the CD, but
unavailable until that customer visits BroadBridge's clients'
website and downloads certain information. In this way,
BroadBridge offers to its clients, the content owner, an Internet
based system whereby the client can control its customer's use of
the content on that CD. (Id.) These conversion services are
marketed to major record labels and content providers, who then
distribute the HyperCD branded CDs to their customers. (Id.)
BroadBridge contracted to provide technical support to its
clients' customers. (Id. ¶ 8). BroadBridge centered its
technical support system on its trademark by registering HyperCD
as a domain name, <hypercd.com>, and by advertising its e-mail
address, <hypercd.com>, on millions of CDs and on the Internet as
the way for its clients' customers to obtain technical support.
(Id. ¶ 7). Through inattentiveness and inadvertence,
plaintiff failed to renew its <hypercd.com> registration, and the
registration along with its e-mail address terminated on March 1,
2000. (Id. ¶ 9). As such, BroadBridge was unable to
provide the contractually required technical support.
Prior to March 22, 2000, one Barry Henderson, living in Pitt
Meadows, British Columbia, Canada, worked for Creation
Technologies, Inc., located in Vancouver, British Columbia,
Canada, and was in charge of their RADAR division. (Henderson
Decl. ¶ 5). As part of his duties, he was responsible for
conceiving product names and corresponding Internet domain names.
That division was developing a new technology which "compresses"
digital audio information as recorded on its own recording
equipment and "burns" this information onto a regular compact
disc, (Id. ¶¶ 5, 6). Apparently on the morning of March 22,
Henderson was brainstorming and came up with "HyperCD" as
accurately describing this new technology. (Id. ¶ 7). Upon
ascertaining that <hypercd.com> was available as a domain name,
Henderson paid $70.00 and registered it with Register.com.
(Id. ¶¶ 8, 9).*fn1
The day after Henderson registered hypercd.com, Ken Parks,
president of BroadBridge Media, e-mailed Henderson, explained
what had happened, and asked Henderson to transfer <hypercd.com>
back to BroadBridge Media. (Park Decl. ¶ 11, Ex. F). Even though
Henderson had only come across the name the day before, Henderson
responded to Parks by describing "HyperCD" as a "feature" of
Creation's recording devices which they have been developing for
sometime at considerable expense and which was "critical" to its
business strategy. (Id. Ex. F). Subsequently, Parks telephoned
Henderson, informed him of BroadBridge's trademark, "HyperCD",
and learned from him that Creation Technologies had never used
"HyperCD" nor <hypercd.com> in connection with the promotion or
sale of any products or services nor had they spent any money
developing a brand identity. (Id. ¶ 12). Park offered
to reimburse Henderson the $70 it cost him to register
<hypercd.com>. (Id. Ex. F). Rejecting this offer, Henderson
remained open to another offer. Park then offered $1000.
Rejecting the $1000, Henderson replied, "I said that I would be
open to a financial compensation in return for transferring the
hypercd.com domain name . . . I would only be open to this
alternative if any compensation that you offer is in keeping with
I consider to be the significant intrinsic value of the name."
(Henderson Decl. Ex. G). Unable to determine what Henderson
thought was "significant intrinsic value of the name" and not
being offered any figure by Henderson, Park turned to his
attorneys to continue the negotiations.
While the attorneys continued their negotiations, Park, on
April 4, offered to rent <firstname.lastname@example.org> from Henderson for a
few months while the domain name issue remained unresolved
between them. Rejecting this offer also, Henderson proposed a
three year rental arrangement with a monthly fee to be determined
but with the requirement that BroadBridge agree "to co-exist with
the use by me [Henderson] (or my designated company) in the U.S.
and elsewhere, of the hypercd name [plaintiff's trademark] in
association with our products and services only in the
professional audio recording industry[,]" and "agree not to
commence any legal proceedings as a result of that use, or
regarding ownership and use of the domain name by us in
connection with our products." (Id. Ex. K).
Two days later, on April 7, BroadBridge offered $5,000. (Green
Decl. ¶ 4). Rejecting that offer, Henderson responded by offering
a three year rental term with a monthly fee of $4,250 (equal to
$153,000 over three years) or $85,000 to transfer the domain
name. (Id. ¶¶ 6, 7). BroadBridge rejected these offers and
offered $7,000. (Id. ¶ 8). Henderson counter-proposed $46,000.
(Id. ¶ 9). BroadBridge rejected this offer as outrageous and
the following week filed a domain name dispute complaint form
under the ICANN procedures and rules. (Cendali Decl. ¶ 11). Two
days later, on April 13, BroadBridge initiated this in rem
proceeding in this Court under the ACPA, not being able to serve
Henderson, a Canadian resident.
Ten days later, BroadBridge filed an order to show cause for a
temporary restraining order and for a preliminary injunction.
After considering the papers submitted, I directed Register.com
to transfer the <hypercd.com> domain name to BroadBridge and set
a hearing for May 3, 2000. Before that hearing took place,
Henderson, on April 25, sought by order to show cause dismissal
of BroadBridge's in rem action and reimbursement of attorney's
fees and other costs associated with defending the action. Judge
Sweet, sitting as the Part I Judge, declined to dismiss the
action and set a hearing on that issue for May 3 before me so
that the entire controversy could be heard at one time. On May 3,
the hearing was so held. Henderson did not appear, but submitted
papers, and Dale Cendali, Esq. spoke for him.
I deal with Henderson's order to show cause to dismiss under
Fed.R.Civ.P. 12(b)(1) and (6) first. Henderson argues that when
plaintiff filed its domain name dispute complaint, it waived its
right to also proceed in federal court. Henderson contends that
paragraph 4(k) of the Uniform Domain Name Dispute Resolution
Policy supports his argument*fn2 because that paragraph
affirmatively states that the complainant may submit the dispute
a court before or after the ICANN administrative proceeding,
and therefore, as a necessary corollary, the paragraph prohibits
a complainant from initiating court proceedings during the
pendency of the administrative proceeding. Thus, Henderson
contends this Court has no jurisdiction. I reject this
interpretation of the ICANN dispute policy. First, ICANN's
policy, rules and complaint form do not state that a complainant
gives up the right to proceed in court by filing a domain name
dispute complaint. Second, the policy clearly states that the
dispute proceedings are to be conducted under the rules, and rule
18 contemplates a complainant going to court*fn3 by giving the
"Panel" discretion to terminate, suspend, or proceed with an
administrative proceeding once court proceedings on the same
matter have begun. Third, I note that experts in this field
likewise interpret paragraph 4(k) as not prohibiting a
complainant from going to court. See Jerome Gilson & Anne
Gilson LaLonde, The Anticybersquatting Consumer Protection Act
and the ICANN Uniform Domain Name Dispute Resolution Policy 36
(2000) (citing paragraph 4(k) for the proposition that either
party involved in a UDRP administrative proceeding may file a
lawsuit before, during, or after the administrative proceeding).
Accordingly, I conclude this Court has jurisdiction, and for the
reasons stated below, plaintiff has stated a claim.*fn4
Accordingly, I deny Henderson's motion to dismiss.
The essence of the ACPA under the subsection at issue here,
see infra note 5, is that it allows a trademark owner, here the
plaintiff, to proceed in rem to have a domain name transferred to
itself if the domain name violates its trademark and if the
trademark owner can not obtain in personam jurisdiction over the
registrant of the offending domain name in the proper course.
Since the purpose of a preliminary injunction is to maintain some
status quo, WarnerVision Entertainment v. Empire of Carolina,
Inc., 101 F.3d 259, 261-62 (2d Cir. 1996), a plaintiff must
demonstrate both (1) that it will suffer irreparable harm if the
motion is not granted and (2) either (a) a likelihood that it
will succeed on the merits of the action, or (b) a sufficiently
serious question going to the merits of the litigation and the
balance of hardships tipping decidedly in plaintiff's favor. L.
& J.G. Stickley Inc. v. Canal Dover Furniture Co., 79 F.3d 258,
261-62 (2d Cir. 1996). However, the standard is heightened when
injunction "alter[s] the status quo by commanding some positive
act." Tom Doherty Assocs., Inc. v. Saban Entertainment, Inc.,
60 F.3d 27, 34 (2d Cir. 1995). Because plaintiff alters the
status quo by requesting this Court to "order the transfer of the
<hypercd.com> domain name to it," the heightened standard of
"substantial" or "clear" likelihood of success applies.
I also find that plaintiff has shown a "substantial" likelihood
of success on the merits. Plaintiff brought this in rem action
under the Anticybersquatting Consumer Protection Act ("ACPA"),
15 U.S.C. § 1125(d)(2).*fn5 To repeat, under the section, the owner
of a mark may file an in rem civil action against a domain name
if that domain name violates any right of the owner of a mark
registered in the Patent and Trademark Office, 15 U.S.C. § 1125
(d)(2)(A)(i), and the court finds that the owner is unable to
"obtain in personam jurisdiction over a person who would have
been a defendant in a civil action under paragraph (1),"
15 U.S.C. § 1125(d)(2)(A)(ii)(I). Accordingly, a plaintiff must show
(1) he owns a mark registered with the Patent and Trademark
Office, (2) a right of his has been violated, and (3) he is
unable to obtain in personam jurisdiction over a person who would
have been a defendant under 15 U.S.C. § 1125(d)(1). Because
plaintiff here alleges that the violated right was under another
subdivision of the ACPA, 15 U.S.C. § 1125(d)(1),*fn6 he
incorporated the elements of that subsection, § 1125(d)(1), into
this in rem proceedings, and therefore, to show a violated right,
he must also show, without regard to goods or services of the
parties, (1) he had a distinctive mark at the time of the
registration of the domain name, (2) that person uses a domain
name that is identical or confusingly similar to plaintiff's
mark, and (3) that person has a bad faith intent to profit from
that mark. 15 U.S.C. § 1125(d)(1).
Many of these elements are undisputed. Plaintiff owns the
"HyperCD" mark and it is registered with the Patent and Trademark
Office. Both parties agree that plaintiff cannot obtain in
personam jurisdiction over Henderson. Since the ".com" portion of
the name is inconsequential to the analysis here, Sporty's Farm,
L.L.C. v. Sportsman's Market, Inc., 202 F.3d 489, 497-98 (2d
Cir. 2000), I find that ...