Collateral Attack on WIPO gTLD Decision Dismissed Under Anticybersquatting Act: C.D. Cal.

Practical Law Legal Update 1-557-3045 (Approx. 4 pages)

Collateral Attack on WIPO gTLD Decision Dismissed Under Anticybersquatting Act: C.D. Cal.

by Practical Law Intellectual Property & Technology

Background

Del Monte Corp. was a wholly owned subsidiary of RJR Nabisco until 1989 when it was divided into two operations. The first operation was dedicated to selling canned fruits and vegetables. The plaintiff, Del Monte International GmbH (Fresh Del Monte) owns the trademark DEL MONTE in South Africa and holds an exclusive perpetual royalty-free worldwide license to use the DEL MONTE mark on or in connection with the production, manufacture, sale and distribution of fresh fruits and vegetables, and an exclusive royalty-free license to use the DEL MONTE mark on or in connection with the production, manufacture, sale and distribution of all food products in Europe, the Middle East, Africa and the former Soviet Union. The declaratory judgment defendant, Del Monte Corp. sells canned fruits and vegetables, also under the DEL MONTE mark.

Fresh Del Monte owned and operated over a dozen "delmonte" second level domain names for over ten years without seeking or receiving authorization from defendant Del Monte Corp. Del Monte Corp. never objected to any of these domain names.

After the Internet Corporation for Assigned Names and Numbers (ICANN) introduced its New Generic Top Level Domain Program (New gTLD Program) in 2011, Fresh Del Monte submitted an application for the gTLD < .delmonte >. Del Monte Corp. filed a Legal Rights Objection (LRO) objecting to Fresh Del Monte's application, under the WIPO rules for New gTLD Dispute Resolution for Legal Rights Objections. WIPO, which is authorized to administer the New gTLD Dispute Resolution Procedure, sustained Del Monte Corp.'s LRO, resulting in Fresh Del Monte's inability to register the < .delmonte > gTLD.

Fresh Del Monte filed suit in the district court seeking a declaratory judgment on three issues that WIPO necessarily addressed in denying Fresh Del Monte the right to registration under the New gTLD Program, namely, whether:

Fresh Del Monte has bona fide rights in the DEL MONTE mark.
Fresh Del Monte is not in violation of the ACPA.
Fresh Del Monte's registration of the gTLD < .delmonte > will not create an impermissible likelihood of confusion.

Fresh Del Monte also requested an order directing Del Monte Corp. to withdraw its LRO.

Del Monte Corp. filed a motion to dismiss under both FRCP 12(b)(1) for lack of subject matter jurisdiction and FRCP 12(b)(6) for failure to state a claim on which relief may be granted.

Outcome

FRCP 12(b)(1)

After determining that an actual case or controversy existed because Fresh Del Monte pleaded a nonfrivolous case under the ACPA, the district court concluded that it had subject matter jurisdiction over the matter.

The court also chose to exercise discretionary jurisdiction over the case because:

Hearing the case would avoid duplicative litigation because there is no overlapping litigation.
The declaratory action would help clarify the legal relations between the parties.

The district court also considered the following factors to be neutral or against exercising jurisdiction:

Although the court would have to determine state law issues, the issues are necessary to the proper adjudication of the case.
Fresh Del Monte bypassed the reconsideration process ICANN provides to file the action in district court.

FRCP 12(b)(6)

Next, the court considered whether Fresh Del Monte had stated a cognizable legal claim under the ACPA. The ACPA prohibits the registering, trafficking in or using of a domain name that is identical or confusingly similar to a distinctive mark with a bad faith intent to profit from the mark. The court noted that to succeed on the merits of its declaratory judgment claim, under the ACPA Fresh Del Monte must first show that < .delmonte > is a domain name and subject to the provisions of the ACPA.

The court noted that determining whether a gTLD was a domain name was a matter of first impression, and further observed that no other court has yet imputed trademark rights to a gTLD. In determining whether a gTLD is a domain name under the ACPA, the district court considered that:

Numerous courts have defined "domain name" as consisting of a top level domain and the second level domain.
The plain language of the ACPA is equivocal because it states that any alphanumeric designation on the internet that is part of an electronic address may be a domain name as long as it is registered with a domain name registrar, domain name registry or other domain name registration authority. This suggests that < .delmonte > could be a domain name if it is properly registered.
ICANN is neither a domain name registrar nor a domain name registry because its role is to administer and coordinate domain name registrars and registries rather than to act at the individual domain name level.
ICANN is also not a domain name registration authority. The court reached this conclusion based on:
- the Vizer v. Vizernews.com court which reasoned that ICANN was not a domain name registration authority because its role is not the "hands-on" registering or assigning of domain names 869 F. Supp.2d 75, 83 (D.D.C. 2012)); and
- the ACPA legislative history, which discloses that the Act's co-sponsor stated that only the entities that actually offer the challenged name, place it in a registry or operate the relevant registry were intended to be covered by the terms "domain name registrar, domain name registry or other domain name authority."

However, the court also noted that ICANN does have a hands-on role with gTLDs because it receives and reviews applications for new gTLDS and ultimately assigns ("delegates") new gTLDs into a database (the "root zone"), thereby acting like a traditional domain name registry.

Ultimately, the court assumed, without deciding, that the < .delmonte > gTLD is a domain name for purposes of determining whether Fresh Del Monte satisfied other elements of its claim under the ACPA. The court then reasoned that, even if < .delmonte > is a domain name, Fresh Del Monte failed to allege a cognizable claim under the ACPA because it could not show that Del Monte Corp. ever registered, trafficked in or used the < .delmonte > domain name. Likewise, Fresh Del Monte never registered the < .delmonte > gTLD because Del Monte Corp.'s LRO prevented ICANN from completing the registration process. Similarly, Fresh Del Monte did not traffic in or use the < .delmonte > gTLD sufficiently to invoke the ACPA's application because the ACPA requires the existence of a registered domain name for there to be liability for its use.

The court concluded, as a matter of law, that because Fresh Del Monte could not be liable under the ACPA, it failed to state a claim on which relief could be granted. The court therefore dismissed the complaint with prejudice and without leave to amend.

Practical Implications

This decision is notable for suggesting that parties may not be able to collaterally attack the rulings of WIPO adversarial proceedings that deny the registration of their gTLDs. However, the precedential effect and reach of the district court's holding in this case of first impression remain open to question because:

It is the first case that addresses whether gTLDs are domain names covered by the ACPA.
The court, in fact, declined to decide whether gTLDs are domain names for purposes of the ACPA.
The court expressly left open the issue of whether a WIPO determination upholding the registration of a gTLD could be challenged under the ACPA.
The district court's reasoning may be open to criticism because it throws into question whether a declaratory judgment of non-violation can ever be granted where the declaratory judgment plaintiff's acts are determined to fall outside the scope of those expressly prohibited by the relevant statute.

Collateral Attack on WIPO gTLD Decision Dismissed Under Anticybersquatting Act: C.D. Cal. | Practical Law