Shields v. Zuccarini

• Citation: 254 F.3d 476
• Decision Date: 15 June 2001
• Docket Number: No. 00-2236,00-2236
• Parties: (3rd Cir. 2001) JOSEPH C. SHIELDS, individually and trading as THE JOE CARTOON COMPANY v. JOHN ZUCCARINI, individually and trading as CUPCAKE CITY; NETWORK SOLUTIONS, INC.; INTERNET CORPORATION, FOR ASSIGNED NAMES AND NUMBERS; John Zuccarini, Individually and trading as Cupcake City, Appellant
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 476

254 F.3d 476 (3rd Cir. 2001)

JOSEPH C. SHIELDS, individually and trading as THE JOE CARTOON COMPANY v. JOHN ZUCCARINI, individually and trading as CUPCAKE CITY; NETWORK SOLUTIONS, INC.; INTERNET CORPORATION, FOR ASSIGNED NAMES AND NUMBERS; John Zuccarini, Individually and trading as Cupcake City, Appellant

No. 00-2236

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued April 24, 2001,

June 15, 2001,

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Howard M. Neu (Argued), Pembroke Pines, Florida, ATTORNEY FOR APPELLANT.

Michael P. Coughlin, William J. Levant (Argued), KAPLIN STEWART MELOFF REITER & STEIN, P.C., Blue Bell, Pennsylvania, ATTORNEYS FOR APPELLEE.

Before: BARRY, AMBRO and ALDISERT, Circuit Judges.

OPINION OF THE COURT

ALDISERT, Circuit Judge.

John Zuccarini appeals from the district court's grant of summary judgment and award of statutory damages and attorneys' fees in favor of Joseph Shields under the new Anticybersquatting Consumer Protection Act ("ACPA" or "Act"). In this case of first impression in this court interpreting the ACPA, we must decide whether the district court erred in determining that registering domain names that are intentional misspellings of distinctive or famous names constitutes unlawful conduct under the Act. We must decide also whether the district court abused its discretion by assessing statutory damages of $ 10,000 per domain name. Finally, we must decide whether the court erred in awarding attorneys' fees in favor of Shields based on its determination that this case qualified as an "exceptional" case under the ACPA. We affirm the judgment of the district court.

The district court had jurisdiction pursuant to 28 U.S.C. 1331. This court has jurisdiction by virtue of 28 U.S.C. 41 and 1291.

I.

Shields, a graphic artist from Alto, Michigan, creates, exhibits and markets cartoons under the names "Joe Cartoon" and "The Joe Cartoon Co." His creations include the popular "Frog Blender," "Micro-Gerbil" and "Live and Let Dive" animations. Shields licenses his cartoons to others for display on T-shirts, coffee mugs and other items, many of which are sold at gift stores across the country. He has marketed his cartoons under the "Joe Cartoon" label for the past fifteen years.

On June 12, 1997, Shields registered the domain name joecartoon.com, and he has operated it as a web site ever since. Visitors to the site can download his animations and purchase Joe Cartoon merchandise. Since April 1998, when it won "shock site of the day" from Macromedia, Joe Cartoon's web traffic has increased exponentially, now averaging over 700,000 visits per month.

In November 1999, Zuccarini, an Andalusia, Pennsylvania "wholesaler" of Internet domain names,¹ registered five world wide web variations on Shields's site: joescartoon.com, joecarton.com, joescartons.com, joescartoons.com and cartoonjoe.com. Zuccarini's sites featured advertisements for other sites and for credit card companies. Visitors were trapped or "mousetrapped" in the sites, which, in the jargon of the computer world, means that they were unable to exit without clicking on a succession of advertisements. Zuccarini received between ten and twenty-five cents from the advertisers for every click.

In December 1999, Shields sent "cease and desist" letters to Zuccarini regarding the infringing domain names. Zuccarini did not respond to the letters. Immediately after Shields filed this suit, Zuccarini changed the five sites to "political protest" pages and posted the following message on them:

This is a page of POLITICAL PROTEST

- Against the web site joecartoon.com -

joecartoon.com is a web site that depicts the mutilation and killing of animals in a shockwave based cartoon format -- many children are inticed [sic] to the web site, not knowing what is really there and then encouraged to join in the mutilation and killing through use of the shockwave cartoon presented to them.

- Against the domain name policys [sic] of ICANN -

- Against the Cyberpiracy Consumer Protection Act -

As the owner of this domain name, I am being sued by joecartoon.com for $ 100,000 so he can use this domain to direct more kids to a web site that not only desensitizes children to killing animals, but makes it seem like great fun and games.

I will under no circumstances hand this domain name over to him so he can do that.

I hope that ICANN and Network Solutions will not assist him to attaining this goal.

-Thank You -

Shields v. Zuccarini, 89 F. Supp. 2d 634, 635-636 (E.D. Pa. 2000).

Shields's Complaint invoked the ACPA as well as federal and state unfair competition law and sought injunctive relief, statutory damages and attorneys' fees. The Complaint originally named Network Solutions, Inc. and the Internet Corporation for Assigned Names and Numbers as defendants, but on February 11, 2000, Shields filed a voluntary notice of dismissal with respect to these defendants.

On March 17, 2000, the district court denied Shields's Motion for Summary Judgment,² holding that Zuccarini had raised a material issue of fact under the ACPA. After affording the parties a brief time for expedited discovery, the court held a hearing on Shields's request for injunctive relief. On March 22, 2000, the court entered a preliminary injunction in favor of Shields, which required Zuccarini to transfer the infringing domain names to Shields and to refrain from "using or abetting the use of " the infringing domain names or any other domain names substantially similar to Shields's marks.

On May 2, 2000, Shields filed a Renewed Motion for Summary Judgment. Zuccarini filed no response. On June 5, 2000, the court entered an Order granting summary judgment in favor of Shields, holding that Zuccarini had registered five variations of Shields's name willfully, in bad faith, and in violation of the Act. On June 16, 2000, Shields filed a Motion for Attorneys' Fees and Costs pursuant to 15 U.S.C. 1117(a). Zuccarini opposed the Motion contending that his conduct did not rise to the level of exceptional circumstances and that the injunction provided Shields with adequate relief.

On July 18, 2000, the district court entered an Order and Judgment awarding statutory damages in the amount of $ 10,000 for each infringing domain name and attorneys' fees and costs in the amount of $ 39,109.46. Zuccarini filed a timely Notice of Appeal on July 26, 2000.

II.

We conduct plenary review of a grant of summary judgment, applying the same standard as the district court. Watson v. Eastman Kodak Co., 235 F.3d 851, 854 (3d Cir. 2000). "Summary judgment is properly granted if 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986) (quoting Rule 56(c), Federal Rules of Civil Procedure). If the moving party meets the initial burden of showing that there is no genuine issue of material fact, the burden shifts to the non-moving party to set forth specific facts showing the existence of such an issue for trial. Rule 56(e), Federal Rules of Civil Procedure. In reviewing the district court's grant of summary judgment, we must view the evidence in the light most favorable to the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). We review a trial court's award of statutory damages for abuse of discretion. Nihon Keizai Shimbun, Inc. v. Comline Business Data, Inc., 166 F.3d 65, 74 (2d Cir. 1999). Our review of the scope and the meaning of the term "exceptional," as used in 15 U.S.C. 1117(a), is plenary. Securacomm Consulting, Inc. v. Securacom, Inc., 224 F.3d 273, 279 (3d Cir. 2000).

III.

On November 29, 1999, the ACPA became law, making it illegal for a person to register or to use with the "bad faith" intent to profit from an Internet domain name that is "identical or confusingly similar" to the distinctive or famous trademark or Internet domain name of another person or company. See 15 U.S.C. 1125(d) (Supp. 2000). The Act was intended to prevent "cybersquatting," an expression that has come to mean the bad faith, abusive registration and use of the distinctive trademarks of others as Internet domain names, with the intent to profit from the goodwill associated with those trademarks. See S. Rep. No. 106-140 (1999), 1999 WL 594571, at *11-18. Under the ACPA, successful plaintiffs may recover statutory damages in an amount to be assessed by the district court in its discretion, from $ 1,000 to $ 100,000 per domain name. See 15 U.S.C. 1117(d) (Supp. 2000). In addition, successful plaintiffs may recover attorneys' fees in "exceptional" cases. See id. at 1117(a).

In Shields's Renewed Motion for Summary Judgment for relief under the Act, he asked the district court to (1) permanently enjoin Zuccarini from using the infringing domain names and any other domain names substantially similar thereto; (2) direct Zuccarini to transfer the infringing domain names to Shields; and (3) award attorneys' fees and statutory damages under 15 U.S.C. 1117(a) and (d), respectively.

In deciding whether to grant a permanent injunction, the district court must consider whether: (1) the moving party has shown actual success on the merits; (2) the moving party will be irreparably injured by the denial of injunctive relief; (3) the granting of the permanent injunction will result in even greater harm to the defendant; and (4) the injunction would be in the public interest. See ACLU v. Black Horse Pike Reg'l Bd. of Educ., 84 F.3d 1471, 1477 nn. 2-3 (3d Cir. 1996).

A.

To succeed on his ACPA claim, Shields was required to prove that (1) "Joe Cartoon" is a distinctive or famous mark entitled to protection; (2) Zuccarini's domain names are "identical...