Ford Motor v. Great Domains

Citation: Ford Motor Co. v. Great Domains, Inc., 2001 U.S. Dist. LEXIS 12712 (E.D. Mich. Mar. 30, 2001) (motion to dismiss regarding personal jurisdiction); 177 F. Supp. 2d 656 (E.D. Mich. 2001) (motions to dismiss on other grounds)

Factual Background
Plaintiffs sued more than 80 persons and entities who registered domain names containing the trademarks FORD, MUSTANG, JAGUAR, ASTON, VOLVO, or LINCOLN. At the time, all the domain names were offered for sale by GreatDomains.com, a domain-name auction site. Eight of the defendant registrants, none residing in Michigan or having any physical contacts there, filed motions to dismiss for lack of personal jurisdiction.

Trial Court Decision
The court rejected plaintiffs’ argument that defendants availed themselves of the privilege of acting in Michigan solely by offering the domain names for sale on a website accessible to Michigan residents. The more difficult question before the court was whether the registrant defendants purposefully directed their actions toward the state of Michigan, knowing that the injurious effects of those actions would be felt there, i.e., the “effects” test. In this regard, the court focused its analysis on whether defendants’ acts were “expressly aimed” at Michigan. The court stated that domain names that incorporate famous marks exist across a broad spectrum from those that are clearly aimed at a mark owner, to those that clearly are not, with a large gray area in between.

According to the court, the mark FORD “plainly has many non-infringing uses on the net,” such as “fordstheatre.org” for a site for the famous theatre where President Lincoln was assassinated, and “ford-mobley.com” for a genealogy site for the Ford-Mobley family. Additionally, the domain “stangtec.com” for a forum for persons with shared interests about Mustang cars constituted legitimate use of the MUSTANG mark. The court considered two factors in determining whether registering a domain name was an act “expressly aimed” at a trademark owner: (1) the likelihood of confusion about who controls the domain name that is created by the name itself, and (2) the level of individualized targeting at the trademark owner.

Factors to consider in assessing the likelihood of confusion included: (1) the existence of other legitimate uses for the exact mark, and (2) the lexical context of the mark within the domain name. Relevant considerations in assessing the level of individual targeting included: (1) whether the domain name registrant tried to sell the name to the trademark owner, (2) whether the registrant registered domain names incorporating other protected marks, (3) whether the domain name has been offered for sale by the registrant and, if so, the price sought, (4) whether the registrant has a preexisting, legitimate use of the domain name, and (5) whether other factors show that use of the mark in the domain name was “expressly aimed” at the forum where the trademark owner resides.

Applying this analysis to the nine domain names at issue, the court concluded that (1) “4fordtrucks.com,” “4fordparts.com,” and “lincolntrucks.com,” in the context of their surrounding words, implicated plaintiff as the probable source of the domain and thus created a high likelihood of confusion; (2) “mercurysource.com,” “stangstuff.com,” and “jaguarcenter.com” created an intermediate likelihood of confusion; and (3) “jaguarenthusiastsclub.com,” “vintagevolvos.com,” and “volvoguy.com” created a low likelihood of confusion. The court held that the domain names creating a high likelihood of confusion satisfied the “expressly aimed” requirement of the effects test and thus denied the motions to dismiss as to those names. As to the other names, the court denied the motions to dismiss without prejudice and permitted limited discovery on the issue of whether those domain names were “expressly aimed” at Michigan.

On December 20, 2001, the court issued a decision addressing various motions to dismiss filed by GreatDomains.com and the defendant registrants. Each of these motions are discussed below.

First, the court denied defendants’ motion to dismiss all in rem claims for lack of subject-matter jurisdiction because plaintiffs did not state any in rem claims in its complaint. The court nonetheless preemptively declined to exercise in rem jurisdiction because all but two of the defendant registrants were located in the United States and were thus subject to personal jurisdiction and none of the domain name registries or registrars were located in this district.

Plaintiffs argued that 15 U.S.C. §1125(d)(2)(C) provided an alternative basis for asserting in rem jurisdiction over domain names because registrar certificates for the domain names were deposited with the court. The court found it unnecessary, however, to determine whether §1125(d)(2)(C) was intended as an alternative basis for asserting in rem jurisdiction because the Constitution’s due-process requirements precluded jurisdiction. According to the court, sufficient minimum contacts did not exist because “[t]he only connection between the domain names and the forum in this case is that the domain names have been ‘brought’ into the forum by Ford to facilitate its convenience in litigating the matter. This clearly is insufficient to satisfy the fairness requirements of the Constitution.”

Second, the court granted in part, and denied in part, defendants’ motion for reconsideration regarding the court’s March 30, 2001, decision denying the registrant defendants’ motion to dismiss for lack of personal jurisdiction. Defendants’ motion for reconsideration challenged the court’s application of the “intent,” “expressly aimed,” and “location of injury” prongs of the effects test for personal jurisdiction over foreign defendants. The court rejected defendants’ assertion that their acts were not intentional because they did not intend to injure plaintiffs, holding that the proper consideration was whether the wrongful acts were committed intentionally and not negligently, not whether there was an intent to injure.

Defendants also argued that the court erred by using the lexical context of their domain names to satisfy the “expressly aimed” prong of the effects test because it introduced a high level of uncertainty and ambiguity into the personal-jurisdiction determination. Although the court maintained that such analysis was helpful in analyzing the “expressly aimed” factor, it agreed with defendants that this factor, without more, was insufficient to support personal jurisdiction. The court granted the motion for reconsideration on the exercise of personal jurisdiction over two of the registrants, but plaintiffs could conduct limited discovery to determine whether other facts supported a finding of “express aiming.”

The court also rejected defendants’ argument that the alleged injury occurs where infringing sales or consumer confusion takes place, not where the trademark owner is located. Unlike infringement and unfair competition claims, the ACPA “does not have consumer protection as its central purpose,” as liability can occur without any use of a domain name. Accordingly, “the brunt of such injury occurs where it is felt by the trademark holder.”

Third, the court granted Greatdomains.com’s motion to dismiss plaintiffs’ ACPA claim for failure to state a claim upon which relief may be granted because GreatDomains.com did not register, use, or traffic in the domain names as required by the ACPA. It was undisputed that GreatDomains did not register any of the names. And GreatDomains did not “use” any of the names because a person cannot be liable under the ACPA for using a domain name unless he or she is the registrant or the registrant’s authorized licensee.

The court focused its analysis on whether GreatDomains trafficked in domain names. Relying on the plain meaning of the statute, the court held that the phrase “traffics in” contemplated “a direct transfer or receipt of ownership interest in a domain name to or from the defendant.” GreatDomains.com’s auctioneering activity did not constitute trafficking because it did not transfer or receive the domain names sold at its site. Moreover, the ACPA’s bad-faith requirement, which focuses on the legitimacy of the defendants’ use of the domain name, also supported the conclusion that only persons directly transferring or receiving a property interest in the domain name can be liable as cybersquatters.

The court also reasoned that subjecting ancillary service providers such as GreatDomains.com to liability under the ACPA would hinder the legitimate buying and selling of domain names over the Internet. Nor could plaintiffs maintain a claim against GreatDomains for contributory liability under the ACPA. The court held that the line of trademark-infringement cases holding that a flea market can be contributorily liable for the acts of their vendors if it exercised direct control and monitoring over them and it supplied the necessary marketplace to sell the infringing products could be applicable to ACPA claims. However, because the ACPA requires a showing of “bad faith intent,” the standard for establishing contributory liability in an ACPA case would be “somewhat heightened.” Specifically, “because legitimate uses of others marks are protected under the ACPA, a plaintiff would have to demonstrate that the ‘cyber-landlord’ knew or should have known that its vendors had no legitimate reason for having registered the disputed domain names in the first place.”

Fourth, the court granted both GreatDomains’s and the registrant defendants’ motions to dismiss plaintiffs’ infringement and dilution claims for failure to state a claim for which relief may be granted. It held that merely registering, warehousing, or trafficking in a domain name that incorporates a protected mark, absent the required use of the name in commerce in connection with goods and services, was not sufficient to establish infringement or dilution. According to the court, the use of a trademark in connection with goods or services in a cybersquatting context “generally will require evidence that the domain name was used to host a web[[site]] from which goods or services have been offered over the Internet.”

Finally, the court denied the registrant defendants’ motion to dismiss plaintiffs’ ACPA claims because plaintiffs alleged sufficient facts supporting the three elements of an ACPA violation, namely, that each defendant registered one or more domain names containing plaintiffs’ marks and offered them for sale over the Internet with a bad-faith intent to profit from plaintiffs’ marks. Defendants argued that plaintiffs failed to make specific allegations of bad-faith intent to profit. However, because bad faith is often hard to prove before discovery, the court held that, at least where facts showing a prima facie case of “intent to profit” can be made, the element of bad faith generally will not come into play until the summary-judgment stage. Drawing all reasonable inferences in favor of plaintiffs, the court held that allegations that domain names containing plaintiffs’ marks were posted for sale through GreatDomains.com to be sufficient to proceed to discovery.

This page uses content from Finnegan’s Internet Trademark Case Summaries. This ]nc entry] is available under the GNU Free Documentation License.