Court Declines to Review LRO to [.delmonte], Saying gTLDs Aren’t ‘Domain Names’ for Cybersquatting Purposes

Screen Shot 2014-02-10 at 9.07.51 AMA Swiss Del Monte entity that had a license to use the “DEL MONTE” mark applies to operate the .delmonte generic top level domain (gTLD). Another Del Monte entity, based in Delaware, filed a “legal rights objection” (under WIPO-established procedures) to the Swiss Del Monte’s application. A three member panel sustained the Delaware company’s LRO. (Here’s a .pdf link to the panel decision.) The Swiss entity sued in federal court seeking a declaration that it had sufficient rights in the “DEL MONTE” mark to operate the TLD and that it was not violating the Anti-cybersquatting Consumer Protection Act (ACPA, the cybersquatting statute) in doing so. The Swiss entity further sought an injunction requiring the Delaware entity to withdraw its LRO.

The court says an initial question is whether it has jurisdiction. The Swiss entity asserted jurisdiction under the Lanham Act and the ACPA. With respect to the Lanham Act, the court says that disputes over the scope of license agreements do not trigger jurisdiction under the Lanham Act—the scope of licenses are resolved with reference to state law. The ACPA as a basis for jurisdiction fares better. The court says that while it’s not clear that the ACPA even applies to gTLDs, plaintiff’s argument that the court should interpret the ACPA to apply to gTLDs is not frivolous. Because plaintiff pleaded a “nonfrivolous” claim under the ACPA, the court says it has jurisdiction.

Is a gTLD a “Domain Name”?

On the key question of whether plaintiff’s application to operate the .delmonte TLD implicates the ACPA, the court says it’s a matter of first impression. Generally, courts ignore the TLD in the context of the trademark analysis (i.e., acme.com is treated the same as “acme” for trademark purposes). Nevertheless, the case law is largely inconclusive.

The court looks to the text of the ACPA and says it’s equivocal:

any alphanumeric designation on the internet that is part of an electronic address may be a domain name so long as it is registered with a domain name registrar, domain name registry, or other domain name registration authority.

While the proposed .delmonte TLD is certainly part of an address, the key question is whether it is registered with a registrar, registry, or other “domain name registration authority.” ICANN is not a registrar or registry, but the tougher question is whether it’s an “other domain name registration authority.” The court looks to a previous case where ICANN was found to not be an “other domain name authority” and quotes comments from ACPA co-sponsor Senator Leahy that the definition of domain names “applies only to second level domain names.” While the text and legislative history support the view that ICANN is not an “other domain name registration authority,” the court says that ICANN’s “extensive involvement” in the gTLD rollout could change the analysis. In this context, ICANN acts “much like a traditional . . . registrar”.  The court says this analysis is inconclusive and moves on to the other prongs of plaintiff’s claim.

Has There been Any Registration or Use of a Domain Name?

The ACPA applies to “registration, trafficking, or use” of a domain name. The ACPA also has a cause of action for “reverse domain name hijacking” – i.e., where a registrant’s name was suspended, disabled, or transferred despite the use of the domain name being lawful.

The ACPA does not define “register,” but a previous case interpreted the term to mean entry into a contractual relationship “with a registrar to ‘make a record’ of the requested domain name.” As a recent 9th Circuit case held, renewal can also constitute registration under the ACPA. However, the court says that there has not been any registration here. Here, ICANN never delegated <.delmonte> into the root zone and no record of the TLD was created. Unlike with respect to a second level domain that’s automatically registered if it’s available, the gTLD process is somewhat more elaborate and the application and delegation process requires numerous steps. In short, the court says that the gTLD application process is totally different from the typical domain name registration process, and these differences are dispositive:

[t]he gTLD application process deliberately separates application from registration. By doing so, the process is designed to stymie cybersquatting activity. In order to do so, the gTLD process introduces high entry costs in the form of its hefty evaluation fee and extensive initial review process. Moreoever, the extensive evaluation process, with its provision for transparency for interested stakeholders, further protects against the potentiality of successful cybersquatting behavior. Such barriers present serious challenges to typical cybersquatting activity. As a result, the protections of the ACPA are much relevant to the gTLD application process than for the current second level domain name registration process.

In addition to not constituting a “registration” the court also says that the Swiss entity’s attempt to apply for the TLD does not constitute trafficking or use. Therefore, the court is unable to state that the Swiss Del Monte entity is not violating the ACPA.

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The court dismisses the lawsuit. However, the court does note that the result could be different if the positions were reversed and the Delaware entity was coming into court challenging a successful application on the part of the Swiss entity.

A bummer for the Swiss Del Monte entity—after sinking a bunch of time and money into the application process, it is left with a decision unreviewable by US courts. (Interestingly, the court did not discuss diversity jurisdiction as a possibility. That seemed like a possible option. Also, the Swiss entity could nevertheless try to proceed in state court but to the extent it prevails, enforcement does not sound like it will be easy.)

Previous cases have dealt with whether subdomains are covered by the ACPA (probably not, see goforit v. Digimedia) but, for obvious reasons, have yet to deal with the question of whether top level domains are covered. This is a significant decision that I would not be surprised to see appealed.

One big caveat to this decision is that the existence of a license agreement–rather than a stranger relationship between users of a string in different spaces–made it much more difficult to use trademark law to challenge the denial of the .gTLD application. Even if the two had been strangers, given that the gTLD process is fairly drawn out, I can see a court saying that a trademark challenge to an as-yet-unrolled out gTLD is not ripe.

Sort of odd that the court leaves in the big exception for someone to challenge a successfully granted gTLD application, but maybe that’s not such a bad thing?

Case citation:  Del Monte International GMBH v. Del Monte Corp., 2014 WL 492960 (C.D. Cal. Feb. 8, 2014)

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