Attorney Fees in In rem Cybersquatting Action?

A Virginia court has granted relief to a plaintiff in an in rem action involving a domain name, but has denied a request for attorney fees because the mere failure of the domain name registrant to appear was insufficient evidence of the bad faith intent required to make an exceptional case under the Lanham Act.  United Airlines Inc. v. Unitedair.com, No. 1:12cv0143 (GBL/JFA) (E.D. Va. June 11, 2012) (see the Magistrate Judge's report and recommendation, and the court's order adopting the Magistrate Judge's findings of fact and recommendation).

United Airlines filed a complaint for cybersquatting under the Anticybersquatting Consumer Protection Act, 15 U.S.C. § 1125(d) ("ACPA"), and sent written notice of the action to the registrant (a Korean individual) of the domain name at issue (unitedair.com), as well as to the registrant's counsel and to companies that provided parking services for the domain name.  United also published notice of the action in the Washington Times.  No party responded; United's claim was the only filing asserting any rights in the domain name.

United's complaint stated the prerequisites for a cybersquatting action (and in fact this case would provide a good primer for anyone researching the procedure for bringing an in rem action).  United's allegations included that United owned registrations for a number of trademarks relating to United Airlines.  The action was brought in the Eastern District of Virginia, the venue where VeriSign, the domain name registry, was located.  The registrant's bad faith was evidenced by the fact that the domain name was clearly used for a click-farm that diverted users to airfare search engines or other websites.

United had instituted a UDRP proceeding that resulted in an order that the domain name be transferred to it.  However, this transfer did not occur after the registrant challenged the UDRP proceeding in Korea.

The court found grounds for entry of a default judgment.  Accordingly, the court ordered transfer of the domain name to Network Solutions, the registrar designated by United, and further ordered that Network Solutions shall transfer the domain name to United.

However, the court declined to grant United's request for attorney fees under the “exceptional case” provision of the Lanham Act, 15 U.S.C. § 1117(a), and also denied costs.  United relied on Agri-Supply Co., Inc. v. agrisupply.com, 457 F.Supp.2d 660 (E.D. Va. 2006), a case that acknowledged the possibility of attorney fees in an in rem cybersquatting action.  However, in that case, the defendant “not only failed to appear, but the registrant ignored a settlement offer and, most importantly, had a 'long documented history of cybersquatting' that gave 'rise to a finding that it acted in bad faith in the present case.”

Here, United had provided “no evidence of maliciousness, willfulness, deliberateness, or bad faith other than the Domain Name's failure to appear after service of process was accomplished and a single UDRP decision that is premised on the same facts that underlie this suit.”  The court thought that “[i]t would be illogical to find that a failure to appear in an in rem proceeding under the ACPA may form an independent basis for an award of attorney's fees under the Lanham Act -- to do so would convert all un-answered ACPA claims (which are in no way exceptional) into 'exceptional' cases.”

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