Litigation

Ninth Circuit: Employee holding a web site for ransom violated Anti-Cybersquatting Act

By Dan Larsen

The Ninth Circuit ruled last week in DSPT International, Inc. v. Nahum that a defendant who lawfully owns and uses a domain name may violate the federal Anti-Cybersquatting Consumer Protection Act (ACCPA), 12 USC sec. 1125(d)(1)(A), by later holding the domain name for ransom.  

Congress intended the ACCPA to impose civil liability on "cyberpirates" who register a well known trademark and either offer to sell the domain name for an exorbitant sum to the trademark owner, or divert business from the trademark owner.   However, in DSPT International v. Nahum, the court found that the ACCPA is written so broadly that it applies beyond these common scenarios.  In DSPT, an employee in good faith registered his employer's web site to himself.  Years later, in a dispute over compensation, the employee took down the web site, refusing to restore it until he was paid.  The Ninth Circuit affirmed a jury verdict for the employer, and an award of damages of $152,000, under the ACCPA.

The ACCPA establishes civil liability for "cyberpiracy" where plaintiff proves: (1) defendant registered or used a domain name; (2) the domain name is identical or confusingly simiar to a protected mark owned by plaintiff; and (3) the defendant acted with a "bad faith intent to profit from that mark."     

Full post as published by Northwest Business Litigation Blog on November 05, 2010 (boomark / email).