194 F.3d 980 (9th Cir. 1999), 97-56734, Lockheed Martin Corp. v. Network Solutions, Inc.

Docket Nº:97-56734
Citation:194 F.3d 980
Party Name:LOCKHEED MARTIN CORPORATION, Plaintiff-Counter-Defendant-Appellant, v. NETWORK SOLUTIONS, INC., Defendant-Counter-Claimant-Appellee.
Case Date:October 25, 1999
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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194 F.3d 980 (9th Cir. 1999)

LOCKHEED MARTIN CORPORATION, Plaintiff-Counter-Defendant-Appellant,

v.

NETWORK SOLUTIONS, INC., Defendant-Counter-Claimant-Appellee.

No. 97-56734

United States Court of Appeals, Ninth Circuit

October 25, 1999

Argued and Submitted June 8, 1999--Pasadena, California

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David W. Quinto, Quinn Emanuel Urquhart Oliver & Hedges, Los Angeles,California, for the plaintiff-counter-defendant-appellant.

Ronald L. Johnston, Blanc Williams Johnston & Kronstadt, Los Angeles, California, for the defendant-counter-claimant-appellee.

Appeal from the United States District Court for the Central District of California; Dean D. Pregerson, District Judge, Presiding. D.C. No. CV-96-07438-DDP (ANx)

Before: Dorothy W. Nelson, Stephen Reinhardt, and Stephen S. Trott, Circuit Judges.

TROTT, Circuit Judge:

Plaintiff Lockheed Martin Corp. ("Lockheed") appeals summary judgment in favor of Defendant Network Solutions, Inc. ("NSI") on Lockheed's action for trademark infringement, unfair competition, dilution, and contributory infringement under the Lanham Trademark Act of 1946, 15 U.S.C. SS 1051-1127 (1994 & Supp. I 1995), as amended (the "Lanham Act"). The district court published its decision granting summary judgment to NSI and refusing to grant Lockheed's motion for leave to amend its complaint. 985 F.Supp. 949 (C.D. Cal. 1997). Lockheed contends that (1) genuine issues of material fact remain on its contributory infringement claim, (2) the district court erred in holding that 15 U.S.C. S 1114(2) did not create an independent basis for liability, and (3) the district court should have permitted Lockheed to amend the complaint to add a cause of action for contributory dilution. We have jurisdiction under 28 U.S.C. S 1291 (1994), and we affirm the judgment of the district court.

I

This appeal concerns the NSI registration scheme for domain-name combinations, which we discussed in our recent Avery Dennison Corp. v. Sumpton, No. 98-55810 (9th Cir. August 23, 1999), decision. An interested reader may wish to review the district court's in-depth discussion of the Internet technology that forms the basis of this cause of action. 985 F.Supp. at 951-53.

When a third party seeks to maintain an Internet web site, that party must reserve a location, called an Internet Protocol ("IP") Address, and do the necessary programming. When an Internet user accesses the third party's web site, the user

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enters the domain-name combination that corresponds to the IP Address and is routed to the host computer. An industry of surrogate hosts has developed, where an Internet Service Provider licenses space on its computers to a third-party web-site operator, permitting the operator to maintain a web site without keeping his or her computer continually connected to the Internet. The Internet Service Providers do not provide the translation service from an entered domain-name combination to the appropriate IP Address. A separate organization has the responsibility to perform the translation function.

A

At all relevant times, NSI was the sole National Science Foundation contractor in charge of registering domain-name combinations for the top-level domains .gov, .edu, .com, .org, and .net. (For clarity, we set off Internetrelated character strings with the caret symbols (" ").) After registration, NSI entered the combination and the corresponding IP Address in its database, permitting automatic translation when an Internet user entered a domain-name combination. NSI is no longer the exclusive registrar. Since oral argument on this appeal, a new competitive scheme has been implemented. See Jeri Clausing, 3-Week Delay in Opening Up Internet Name Registration, N.Y. Times, June 28, 1999, at C1.

When registering with NSI to receive a domain-name combination, an applicant submits NSI's "template" electronically over the Internet. On approval, NSI puts the domain-name combination in its database in conjunction with the correct IP Address. NSI then routes Internet users who enter a certain domain-name combination to the registrant's computer. At the time of argument on this appeal, NSI was receiving approximately 130,000 registrations per month, although evidence indicates that the number of monthly registrations has been increasing steadily and is possibly much larger today. Ninety percent of templates are processed electronically, and the entire registration process for each application requires between a few minutes and a few hours. Ten percent of the time, an employee of NSI reviews the application. Human intervention might occur because of an error in filling out the form or because the applied-for domain name includes a "prohibited" character string -such as specific variations on the words Olympic, Red Cross, or NASA, and certain "obscene" words. NSI also performs a conflict check on all applications, which compares an application to other registered domain-name combinations. However, NSI does not consult third parties during the registration process, check for a registrant's right to use a particular word in a domain-name combination, or monitor the use of a combination once registered. NSI is also not an Internet Service Provider. It performs none of the "hosting" functions for a web site.

NSI does maintain a post-registration dispute-resolution procedure. Anyone who feels that his or her rights are violated by the domain-name combination maintained by a registrant can submit a certified copy of a trademark registration to NSI. NSI then requires the registrant to obtain a declaratory judgment of the right to maintain the domain-name combination. If the registrant fails to do so, its registration is terminated.

B

Lockheed owns and operates "The Skunk Works," an aircraft design and construction laboratory. Since 1943, The Skunk Works has developed prototypes of this country's first jet fighter, the U-2 and SR-71 spy planes, and the F-117 and F-22 fighter planes. The Skunk Works is currently involved in designing a possible replacement for the space shuttle. "Skunk Works" is a registered and incontestable service mark.

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II

Third parties, not involved in this litigation, have registered domain-name combinations with NSI which are variations on the phrase "skunk works." These include: , , , , , , , , , , , and . Lockheed alleges that many of these registrations infringe and dilute its "Skunk Works" service mark.

Lockheed sent two letters, on May 7 and June 18, 1996, bringing the and registrations to NSI's attention. Lockheed's letters informed NSI of its belief that the third-party registrants were infringing or diluting Lockheed's service mark. Lockheed requested that NSI cancel the allegedly offending registrations. Lockheed also requested that NSI cease registering domain-name combinations that included "Skunk Works" or variations on the phrase and report to Lockheed all such domain-name combinations contained in its registry. NSI took no action on Lockheed's requests, informing Lockheed by letter that Lockheed had failed to comply with the terms of NSI's dispute resolution policy. Due to Lockheed's dealings with the third-party registrants, and ceased being used, but NSI did not immediately cancel the registrations and later permitted a new registrant to register .

Lockheed sued NSI on October 22, 1996, claiming contributory service mark infringement, infringement, unfair competition, and service mark dilution, all in violation of the Lanham Act, and also seeking declaratory relief. The complaint alleged that four specific domain-name registrations infringed or diluted Lockheed's "Skunk Works" service mark. The parties stipulated to April 1, 1997, as the cut-off date for motions to amend the pleadings. Lockheed later proposed, over NSI's objection, that the cutoff date be moved to July 7, 1997. NSI moved for summary judgment. On August 19, 1997, Lockheed moved to amend its complaint to add a cause of action for contributory dilution and to allege several additional domain-name combinations registered with NSI. The district court denied the motion to amend and granted summary judgment to NSI.

III

We review the district court's grant of summary judgment de novo. Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998). Viewing the evidence in the light most favorable to the nonmoving party, summary judgment is appropriate if no genuine issues of material fact remain and the non-moving party is entitled to judgment as...

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