273 F.3d 14 (1st Cir. 2001), 01-1197, Sallen v. Corinthians Licenciamentos

Docket Nº:01-1197
Citation:273 F.3d 14
Party Name:JAY D. SALLEN d/b/a J.D.S. Enterprises, Plaintiff, Appellant, v. CORINTHIANS LICENCIAMENTOS LTDA and DESPORTOS LICENCIAMENTOS LTDA, Defendants, Appellees.
Case Date:December 05, 2001
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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273 F.3d 14 (1st Cir. 2001)

JAY D. SALLEN d/b/a J.D.S. Enterprises, Plaintiff, Appellant,

v.

CORINTHIANS LICENCIAMENTOS LTDA and DESPORTOS LICENCIAMENTOS LTDA, Defendants, Appellees.

No. 01-1197

United States Court of Appeals, First Circuit

December 5, 2001

Heard Oct. 4, 2001

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

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[Copyrighted Material Omitted]

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Linda A. Harvey with whom Harvey & Kleger was on brief for appellant.

Amy B. Goldsmith with whom George Gottlieb, Marc P. Misthal, Gottlieb, Rackman & Reisman, P.C., Curtis Krechevsky, Mark D. Robins and Hutchins, Wheeler & Dittmar were on brief for appellees.

Before Lynch, Circuit Judge, Stahl, Senior Circuit Judge, and Lipez, Circuit Judge.

LYNCH, Circuit Judge.

This case raises important issues about the relationship between the Anticybersquatting Consumer Protection Act ("ACPA") and the World Intellectual Property Organization ("WIPO") dispute resolution procedures under the Uniform Domain Name Dispute Resolution Policy ("UDRP"). This is a dispute between Jay D. Sallen, a resident of Brookline, Massachusetts, and Corinthians Licenciamentos LTDA ("CL"), a Brazilian corporation, over Sallen's registration and use of the domain name corinthians.com. We are asked to determine whether Sallen, a domain name registrant who has lost the use of a domain name in a WIPO dispute resolution proceeding that declared him a cybersquatter under the UDRP, may bring an action in federal court seeking (1) a declaration that he is not in violation of the ACPA; (2) a declaration that he is not required to transfer the domain name to CL; and (3) such relief as necessary to effectuate these ends.1 The district court held that federal courts lack jurisdiction over such claims. For the reasons that follow, we reverse the district court and hold that there is federal jurisdiction over such claims.

I. This is a case in the new territory of cybersquatting (also known as "cyberpiracy" or "domain name hijacking"), an Internet

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phenomenon whereby individuals register Internet domain names in violation of the rights of trademark owners. S. Rep. No. 106-140, at 4 (1999). Alternatively, the case may be viewed as possibly one of "reverse domain name hijacking," whereby trademark owners abusively assert their trademark rights to strip domain names from rightful owners. See UDRP Rule 1, at http://www.icann.org/udrp/udrp-rules-24oct99.htm (Oct. 24, 1999) (defining "reverse domain name hijacking"). Cybersquatters often register domain names incorporating the trademarks of others, with the intent of selling the domain names back to the trademark owners at a profit. S. Rep. No. 106-140, at 4-5; H.R. Rep. No. 106-412, at 5 (1999); Sporty's Farm L.L.C. v. Sportsman's Mkt., Inc., 202 F.3d 489, 493 (2d Cir. 2000). Some trademark owners, however, may find accusations of cybersquatting a convenient way to bypass legitimate disputes over trademark rights. See 145 Cong. Rec. S15,026 (1999).

CL asserts that it has rights in Brazil to the name "Corinthiao," the Portuguese equivalent of "Corinthians," which is the name of a soccer team popular in Brazil. In the district court, and before this court, CL argued that a WIPO panel2 properly found that Sallen was a cybersquatter under the UDRP. The UDRP applies to Sallen because its terms are incorporated into his domain name registration agreement -- a private contract. CL says that federal courts do not have jurisdiction to revisit the issue of whether Sallen is a cybersquatter as determined under that contract. Further, CL says, federal courts lack jurisdiction over Sallen's suit under the ACPA because CL has disclaimed any intent to sue Sallen under the ACPA. If Sallen cannot reasonably fear a lawsuit under the ACPA, so the argument goes, then there is no Article III case or controversy. CL insists that its victory under the UDRP is unrelated to, and unaffected by, any cause of action under the ACPA. Even if Sallen had an affirmative right under the ACPA to use corinthians.com, it says, he has contractually waived that right by agreeing to the UDRP's different legal standard in his domain name registration agreement.

Sallen unsuccessfully defended his registration and use of corinthians.com in a WIPO dispute resolution proceeding initiated by CL. WIPO Arbitration and Mediation Center, Administrative Panel Decision, Corinthians Licenciamentos LTDA v. Sallen, No. D2000-0461 (July 17, 2000) (Bianchi, Sole Panelist), at http://arbiter.wipo.int/domains/decisions/html/2000/d2000-0461.html.

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Sallen then filed a complaint in federal court against CL seeking a declaration that his registration and use of corinthians.com is not unlawful under the ACPA. He relied on both 15 U.S.C. § 1114(2)(D)(v) and the declaratory judgment statute, 28 U.S.C. § 2201. Section 1114(2)(D)(v) states:

A domain name registrant whose domain name has been suspended, disabled, or transferred under a policy described under clause (ii)(II) may, upon notice to the mark owner, file a civil action to establish that the registration or use of the domain name by such registrant is not unlawful under this chapter. The court may grant injunctive relief to the domain name registrant, including the reactivation of the domain name or transfer of the domain name to the domain name registrant.

15 U.S.C. § 1114(2)(D)(v) (2000).

Sallen asserts that (1) this provision of the ACPA creates an explicit cause of action for a declaration that a registrant who has lost a domain name under the UDRP has lawfully registered and used that domain name; (2) this declaration overrides the WIPO panel's decision to the contrary; and (3) federal courts may order the domain name reactivated or transferred back to the aggrieved registrant. Sallen's position is that, despite the terms of his domain name registration agreement, and despite the WIPO panel's interpretation of those terms, he is entitled to retain registration and use of corinthians.com if his registration and use of the domain name is consistent with the ACPA.

This case raises an issue of first impression, requiring us to determine whether a domain name registrant, who has lost in a WIPO-adjudicated UDRP proceeding, may bring an action in federal court under § 1114(2)(D)(v) seeking to override the result of the earlier WIPO proceeding by having his status as a nonviolator of the ACPA declared and by getting an injunction forcing a transfer of the disputed domain name back to him. The answer to this question turns on the relationship between the ACPA, in particular § 1114(2)(D)(v), and decisions of administrative dispute resolution panels contractually empowered to adjudicate domain name disputes under the UDRP.

The district court dismissed Sallen's complaint on the grounds that no actual controversy existed between the parties since CL never claimed that Sallen violated the ACPA. We hold that, although CL represented that it had "no intent to sue [Sallen] under the ACPA for his past activities in connection with corinthians.com," an actual controversy did exist between the parties concerning rights to corinthians.com, and that the district court incorrectly dismissed Sallen's complaint. Section 1114(2)(D)(v) grants domain name registrants who have lost domain names under administrative panel decisions applying the UDRP an affirmative cause of action in federal court for a declaration of nonviolation of the ACPA and for the return of the wrongfully transferred domain names. Accordingly, we reverse and remand to the district court.

II.

A. Internet Background

The Internet is a network of computers allowing a user on the network to communicate with any other computer on the network. See 15 U.S.C. § 1127 (incorporating, for purposes of the Trademark Act, the definition of Internet given by 47 U.S.C. § 230(f): "the international computer network of both Federal and non-Federal interoperable packet switched data networks"); H.H. Perritt, Jr. Law

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and the Information Superhighway § 1.02[B], at 6-7 (2d ed. 2001) (briefly explaining how the Internet works); G.B. Delta & J.H. Matsuura, Law of the Internet § 1.02 (2001) (documenting the Internet's history). Although there are many widely used applications on the Internet, Perritt, supra, § 1.02[B], at 7, the World Wide Web is the dominant application, id. § 1.02[G], at 12. "[T]he Web is a method of organizing information distributed across the Internet." Id. Users of the Internet may make information available on the Web and access information made available by others. Id. Internet users are able to access desired content on the Web by typing in the correct Uniform Resource Locator ("URL"), or domain name, which functions much like a telephone number, allowing a user who enters the correct address to reach a particular Web site.3

A domain name consists of at least two parts: the top level domain and the second level domain. The top level domain, such as .com, .net, or .org, is preceded by the second level domain, which consists of a combination of letters, numbers, or some symbols. So, for example, in the domain name uscourts.gov, ".gov" is the top level domain name and "uscourts" is the second level domain name. A user wishing to view the Federal Judiciary's official Web site could do so by entering "http://www.uscourts.gov" into her Web browser.

Presently, users may not claim their own top level domains, but anyone wishing to obtain a second level domain name may, for a fee, enter into a registration agreement with a domain name registrar, thereby acquiring exclusive rights to that second level domain and the ability to create as many third (or higher) level domains as...

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