Harrods Limited v. Sixty Internet Domain Names
302 F.3d 214 (2002)
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Rule of Law:
A company that holds legitimate, but geographically limited, trademark rights commits a bad faith violation of the Anticybersquatting Consumer Protection Act (ACPA) if it registers domain names with the intent to profit by diverting and confusing consumers outside of its designated territory who are seeking the other concurrent trademark holder.
Facts:
- Harrods UK has operated a department store in London since 1849 and holds trademark rights for the 'Harrods' name in the United States.
- In 1912, Harrods UK was involved in the creation of Harrods BA, which opened a department store under the 'Harrods' name in Buenos Aires, Argentina, in 1914.
- Over time, Harrods BA registered the 'Harrods' trademark in several South American countries, and all legal ties between Harrods BA and Harrods UK were severed by 1963, making them distinct corporate entities.
- In the early 1990s, Harrods UK and Harrods BA entered into unsuccessful negotiations for Harrods UK to purchase Harrods BA's South American trademark rights.
- Harrods BA's department store business declined and ceased operations around 1998, with its only revenue coming from a parking garage.
- In 1999, around the same time Harrods UK launched its e-commerce website, Harrods BA registered approximately 300 'Harrods'-related domain names with a registry based in Herndon, Virginia.
- A business proposal prepared for Harrods BA by a consultant, Mr. Capuro, detailed a plan to use the domain names for an online portal.
- This proposal included an illustration of a transaction by a 'UK citizen' and used the distinctive script logo of Harrods UK, not Harrods BA's logo; Harrods BA then used this proposal to solicit investors in the United States and Europe.
Procedural Posture:
- Harrods UK filed an in rem lawsuit against 60 domain names in the U.S. District Court for the Eastern District of Virginia.
- The district court (trial court) dismissed Harrods UK's trademark infringement and dilution claims, holding that the ACPA's in rem provision was limited to bad faith claims.
- Harrods UK filed an amended complaint alleging bad faith registration.
- On a motion for summary judgment, the district court ruled in favor of six of the domain names (the 'Argentina Names').
- Following a bench trial concerning the remaining 54 domain names, the district court found Harrods BA had acted in bad faith and ordered the names transferred to Harrods UK.
- Both parties appealed to the U.S. Court of Appeals for the Fourth Circuit: the Domain Names appealed the judgment against the 54 names, and Harrods UK appealed the dismissal of its infringement/dilution claims and the summary judgment for the six Argentina Names.
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Issue:
Does a company with legitimate, geographically limited rights to a trademark register domain names with a 'bad faith intent to profit' under the Anticybersquatting Consumer Protection Act (ACPA) when it intends to use those domain names to attract and divert customers from outside its designated territory who are seeking the other, more famous, concurrent trademark holder?
Opinions:
Majority - Judge Michael
Yes. A company registers domain names with a bad faith intent to profit when, despite having geographically limited rights to a mark, it intends to use those names to improperly divert and profit from the goodwill of a concurrent trademark holder by targeting consumers outside its territory. The Anticybersquatting Consumer Protection Act's (ACPA) nine-factor test for bad faith must be applied contextually, especially in cases of legitimate concurrent trademark users. Here, while Harrods BA had legitimate rights to the 'Harrods' name in South America (Factor I) and it was part of its legal name (Factor II), its intent to divert customers was dispositive (Factor V). The business proposal prepared by Capuro, which Harrods BA used to solicit investors, explicitly targeted UK customers and used Harrods UK's logo, which constitutes overwhelming evidence of an intent to cause confusion and trade on Harrods UK's goodwill. This intent to improperly leverage Harrods UK's fame also supported a finding of bad faith under Factor VI. The court held that this evidence demonstrated that Harrods BA crossed the line from permissible use of its own mark to an impermissible intent to profit from Harrods UK's protected mark. The court also made two other significant rulings: first, that the ACPA's in rem provision (15 U.S.C. § 1125(d)(2)) is not limited to bad faith claims and also permits actions for trademark infringement and dilution; second, that the standard of proof for bad faith under the ACPA is a preponderance of the evidence, not the higher clear and convincing evidence standard.
Analysis:
This decision provides a crucial framework for applying the ACPA to concurrent trademark users, clarifying that geographically-based trademark rights do not provide a shield for cybersquatting on the global internet. It establishes that the registrant's intent to target consumers outside its authorized territory is the key element in finding bad faith, preventing a junior or less-famous user from encroaching on the senior user's market. Furthermore, the court's broad interpretation of the ACPA's in rem jurisdiction significantly strengthens the position of trademark holders, allowing them to pursue infringement and dilution claims directly against domain names when personal jurisdiction over the registrant is unavailable. This ruling expands the utility of the ACPA as a tool for protecting trademark rights online beyond just classic cybersquatting cases.
