Broadbridge Media, L.L.C. v. Hypercd.com

• Citation: 106 F. Supp.2d 505
• Decision Date: 07 July 2000
• Docket Number: 00 CV 2884 (RO)
• Parties: BroadBridge Media, L.L.C., Plaintiff, v. Hypercd.com, an Internet Domain Name, Defendant.
• Court: New York Court of Appeals

106 F. Supp.2d 505

BroadBridge Media, L.L.C., Plaintiff, v. Hypercd.com an Internet Domain Name, Defendant.

00 CV 2884 (RO)

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK

Decided July 7, 2000

Filed July 11, 2000

For Plaintiff: Ira Jay Levy, DARBY & DARBY P.C.

For Defendant: Dale M. Cendali, O'MELVENY & MYERS LLP.

Richard Owen, United States District Judge.

MEMORANDUM AND ORDER

OWEN, District Judge

Before me in this in rem proceeding under the recently enacted Anticybersquatting Consumer Protection Act (ACPA) are plaintiff BroadBridge Media's order to show cause for a preliminary injunction continuing the transfer of the domain name (hypercd.com) from Barry Henderson to plaintiff, earlier ordered on a TRO, and Henderson's cross motion to dismiss for lack of jurisdiction or failure to state a claim. I find jurisdiction, deny Henderson's motion to dismiss, and grant plaintiff's motion, and direct Register.com to maintain the registration of (hypercd.com) in the plaintiff's name.

Since 1996, BroadBridge and its predecessors, in connection with its business, have distributed over 4,500,000 compact discs bearing the mark HyperCD and the domain name (hypercd.com) . (Park Decl.P 5). BroadBridge's predecessor in interest registered HyperCD as a trademark with the United States Patent and Trademark Office on September 17, 1997, and received Federal Registration No. 2,098,352. (Id. P 4, Exs. A, B). Plaintiff under this trademark promotes technology which converts and "compresses" analog audio information into digital information and "burns" this information onto a compact disc ("CD"). (Id. P 3). Under this trademark, plaintiff also promotes its technology which allows its clients' customers to access additional features embedded in the CD, but unavailable until that customer visits BroadBridge's clients' website and downloads certain information. In this way, BroadBridge offers to its clients, the content owner, an Internet based system whereby the client can control its customer's use of the content on that CD. (Id.) These conversion services are marketed to major record labels and content providers, who then distribute the HyperCD branded CDs to their customers. (Id.)

BroadBridge contracted to provide technical support to its clients' customers. (Id. P 8). BroadBridge centered its technical support system on its trademark by registering HyperCD as a domain name, (hypercd.com) , and by advertising its e-mail address, (tech@hypercd.com) , on millions of CDs and on the Internet as the way for its clients' customers to obtain technical support. (Id. P 7). Through inattentiveness and inadvertence, plaintiff failed to renew its (hypercd.com) registration, and the registration along with its e-mail address terminated on March 1, 2000. (Id. P 9). As such, BroadBridge was unable to provide the contractually required technical support.

Prior to March 22, 2000, one Barry Henderson, living in Pitt Meadows, British Columbia, Canada, worked for Creation Technologies, Inc., located in Vancouver, British Columbia, Canada, and was in charge of their RADAR division. (Henderson Decl. P 5). As part of his duties, he was responsible for conceiving product names and corresponding Internet domain names. That division was developing a new technology which "compresses" digital audio information as recorded on its own recording equipment and "burns" this information onto a regular compact disc, (Id. PP 5, 6). Apparently on the morning of March 22, Henderson was brainstorming and came up with "HyperCD" as accurately describing this new technology. (Id. P 7). Upon ascertaining that (hypercd.com) was available as a domain name, Henderson paid $ 70.00 and registered it with Register.com. (Id. PP 8, 9). ¹

The day after Henderson registered hypercd.com, Ken Parks, president of BroadBridge Media, e-mailed Henderson, explained what had happened, and asked Henderson to transfer (hypercd.com) back to BroadBridge Media. (Park Decl. P11, Ex. F). Even though Henderson had only come across the name the day before, Henderson responded to Parks by describing "HyperCD" as a "feature" of Creation's recording devices which they have been developing for sometime at considerable expense and which was "critical" to its business strategy. (Id. Ex. F). Subsequently, Parks telephoned Henderson, informed him of BroadBridge's trademark, "HyperCD", and learned from him that Creation Technologies had never used "HyperCD" nor (hypercd.com) in connection with the promotion or sale of any products or services nor had they spent any money developing a brand identity. (Id. P 12). Park offered to reimburse Henderson the $ 70 it cost him to register(hypercd.com) . (Id. Ex. F). Rejecting this offer, Henderson remained open to another offer. Park then offered $ 1000. Rejecting the $ 1000, Henderson replied, "I said that I would be open to a financial compensation in return for transferring the hypercd.com domain name . . . I would only be open to this alternative if any compensation that you offer is in keeping with I consider to be the significant intrinsic value of the name." (Henderson Decl. Ex. G). Unable to determine what Henderson thought was "significant intrinsic value of the name" and not being offered any figure by Henderson, Park turned to his attorneys to continue the negotiations.

While the attorneys continued their negotiations, Park, on April 4, offered to rent (tech@hypercd.com from Henderson for a few months while the domain name issue remained unresolved between them. Rejecting this offer also, Henderson proposed a three year rental arrangement with a monthly fee to be determined but with the requirement that BroadBridge agree "to co-exist with the use by me [Henderson] (or my designated company) in the U.S. and elsewhere, of the hypercd name [plaintiff's trademark] in association with our products and services only in the professional audio recording industry[,]" and "agree not to commence any legal proceedings as a result of that use, or regarding ownership and use of the domain name by us in connection with our products." (Id. Ex. K).

Two days later, on April 7, BroadBridge offered $ 5,000. (Green Decl. P 4). Rejecting that offer, Henderson responded by offering a three year rental term with a monthly fee of $ 4,250 (equal to $ 153,000 over three years) or $ 85,000 to transfer the domain name. (Id. PP 6, 7). BroadBridge rejected these offers and offered $ 7,000. (Id. P 8). Henderson counter-proposed $ 46,000. (Id. P9). BroadBridge rejected this offer as outrageous and the following week filed a domain name dispute complaint form under the ICANN procedures and rules. (Cendali Decl. P 11). Two days later, on April 13, BroadBridge initiated this in rem proceeding in this Court under the ACPA, not being able to serve Henderson, a Canadian resident.

Ten days later, BroadBridge filed an order to show cause for a temporary restraining order and for a preliminary injunction. After considering the papers submitted, I directed Register.com to transfer the (hypercd.com) domain name to BroadBridge and set a hearing for May 3, 2000. Before that hearing took place, Henderson, on April 25, sought by order to show cause dismissal of BroadBridge's in rem action and reimbursement of attorney's fees and other costs associated with defending the action. Judge Sweet, sitting as the Part I Judge, declined to dismiss the action and set a hearing on that issue for May 3 before me so that the entire controversy could be heard at one time. On May 3, the hearing was so held. Henderson did not appear, but submitted papers, and Dale Cendali, Esq. spoke for him.

I deal with Henderson's order to show cause to dismiss under Fed. R. Civ. P. 12(b)(1) and (6) first. Henderson argues that when plaintiff filed its domain name dispute complaint, it waived its right to also proceed in federal court. Henderson contends that paragraph 4(k) of the Uniform Domain Name Dispute Resolution Policy supports his argument ² because that paragraph affirmatively states that the complainant may submit the dispute toa court before or after the ICANN administrative proceeding, and therefore, as a necessary corollary, the paragraph prohibits a complainant from initiating court proceedings during the pendency of the administrative proceeding. Thus, Henderson contends this Court has no jurisdiction. I reject this interpretation of the ICANN dispute policy. First, ICANN's policy, rules and complaint form do not state that a complainant gives up the right to proceed in court by filing a domain name dispute complaint. Second, the policy clearly states that the dispute proceedings are to be conducted under the rules, and rule 18 contemplates a complainant going to court ³ by giving the "Panel" discretion to terminate, suspend, or proceed with an administrative proceeding once court proceedings on the same matter have begun. Third, I note that experts in this field likewise interpret paragraph 4(k) as not prohibiting a complainant from going to court. See Jerome Gilson & Anne Gilson LaLonde, The Anticybersquatting Consumer Protection Act and the ICANN Uniform Domain Name Dispute Resolution Policy 36 (2000) (citing paragraph 4(k) for the proposition that either party involved in a UDRP administrative proceeding may file a lawsuit before, during, or after the administrative proceeding). Accordingly, I conclude this Court has jurisdiction, and for the reasons stated below, plaintiff has stated a claim. ⁴ Accordingly, I deny Henderson's motion to dismiss.

The essence of the ACPA under the subsection at issue here, see infra note 5, is that it allows a trademark owner, here the plaintiff, to proceed in rem to have a domain name transferred to itself if the domain name violates its trademark and if the trademark owner can not obtain in personam jurisdiction over the registrant of the offending domain name in the proper course. Since the purpose of a preliminary injunction is to maintain some status...