(I found this unpublished case interesting because it was about reverse domain hijacking, used the Uniform Domain Name Dispute Resolution Policy, and most imporantly, Penthouse was the plaintiff. Enjoy. – dkh)
General Media Comm., Inc. v. Crazy Troll, LLCS, 2007 WL 102988 (S.D.N.Y. 2007).
Not for Publication
United States District Court, S.D. New York.
GENERAL MEDIA COMMUNICATIONS, INC., Plaintiff,
CRAZY TROLL, LLC and Gene Heu, Defendants.
No. 06 Civ. 40581 LAKFM.
January 16, 2007.
MEMORANDUM DECISION AND ORDER
MAAS, Magistrate J.
This case arises out of a dispute between plaintiff General Media Communications, Inc. (“GMCI”), which publishes Penthouse Magazine and exploits the Penthouse name through a variety of related means, and defendant Crazy Troll, LLC (“Crazy Troll”), which acquired the internet domain name “penthouseboutique.com” after GMCI’s bankruptcy trustee permitted it to lapse. When Crazy Troll’s registration and use of the name came to GMCI’s attention, GMCI instituted a proceeding with the National Arbitration Forum (“NAF”) under the Uniform Domain Name Dispute Resolution Policy (“UDRP”) to retrieve its penthouseboutique.com domain name. Thereafter, an NAF “panel,” consisting of a single panelist, reissued a decision (“UDRP Decision”) in which it declined to transfer the domain name to GMCI. The panel further found in the UDRP Decision that GMCI had acted in bad faith in bringing the proceeding and had engaged in reverse domain name hijacking.
Although the complaint in this action contains several claims for relief, GMCI has moved pursuant to Rule 56 of the Federal Rules of Civil Procedure for partial summary judgment solely on its fifth claim, which seeks a declaration that it did not initiate or pursue the UDRP proceeding in bad faith or engage in reverse domain name hijacking. The parties have consented to my jurisdiction to decide this motion, which is granted (essentially without opposition) for the reasons set forth below.
GMCI is a corporation duly organized and existing under the laws of the State of New York, doing business at 2 Penn Plaza, New York, New York. GMCI and its affiliates own and operate penthouse.com, a leading adult entertainment website, and have licensed their marks for a broad array of products and services, including retail stores, clothing, and the website penthousestore.com, an e-commerce site that provides adult video entertainment and other products.
Defendant Gene Heu (“Heu”) is the principal of Crazy Troll, a New York limited liability company with its principal place of business at 184 Coolidge Drive, East Meadow, New York. CrazyTroll.com is listed on various internet registrar databases as the registrant and administrative contact for penthouseboutique.com. (Heu and Crazy Troll are hereinafter referred to together as the “defendants.”)
Since in or around 1969, GMCI and its predecessors in interest have published Penthouse Magazine, which has had a national monthly circulation of approximately 369,000, and a readership of approximately 3.5 million.
In 2003, GMCI’s former parent, General Media, Inc. (“GMI”), filed for bankruptcy. After a reorganization in 2004, GMI emerged as Penthouse Media Group Inc. (“PMG”) under the control of a group of private investors. One of PMG’s subsidiaries is GMCI.
In an effort to capitalize on the popularity of Penthouse Magazine, PMG and GMCI have sought to expand the use of the Penthouse marks to numerous other branded products and services, including retail stores, online retail stores, websites, apparel, restaurants, nightclubs, calendars, and video and audio cassettes.
The flagship Penthouse website is penthouse.com, but GMCI owns and operates others, and has licensed several e-commerce sites, including penthousestore.com, an online store offering adult and other products, penthousejewelry.com, an online jewelry store and penthouselingerie.com, an online lingerie store. GMCI and its licensees have sold, and continue to sell, millions of dollars worth of goods and services under the Penthouse marks. Consequently, GMCI has built up extensive goodwill symbolized by the Penthouse marks.
GMCI owns nearly twenty Penthouse trademark and service mark registrations for use in connection with a variety of goods and services, many of which have become incontestable in accordance with Sections 15 and 33(b) of the Lanham Act, 15 U.S.C. § § 1065 and 1115(b). GMCI also is the owner of numerous United States applications for registration of the Penthouse and related trademarks including the Penthouse mark. These applications include Application Serial No. 76/640,451, filed by GMCI with the United States Patent and Trademark Office (“USPTO”) on June 8, 2005, for penthousestore.com, an online store offering retail goods such as clothing, videos, and magazines.
One of GMCI’s ventures involves the licensing of the Penthouse marks to qualified business partners. In furtherance of that goal, on or about June 10, 2003, GMCI entered into a license agreement to establish a Penthouse Boutique retail store. The first such store opened in July 2003 in Milford, Connecticut. This 10,000 square foot store sells hosiery, shoes, branded apparel, lingerie, body jewelry, and various adult products.
A second Penthouse Boutique store, located in Hartford, Connecticut, opened in October 2005. Like the first Penthouse Boutique store, the Hartford location occupies approximately 10,000 square feet of retail space and offers clothing, lingerie, DVDs, and adult products for sale.
Nine days after it entered into the first Penthouse Boutique license agreement, GMCI filed Trademark Application Serial No. 76/526068 for the Penthouse Boutique mark (in design form) for retail store services featuring adult products. The application, which was filed on an intent-to-use basis under Section 1(b) of the Lanham Act, issued to registration on May 17, 2005.
For a period of time prior to October 14, 2004, GMCI Internet Operations, Inc. (“GIO”), an affiliate of GMCI, owned the domain name penthouseboutique.com. Apparently, GIO allowed the penthouseboutique.com registration to lapse during the GMI bankruptcy proceedings, at which point the registrar released the domain name. Due to the change in corporate ownership resulting from reorganization after bankruptcy, GMCI did not learn that its affiliate GIO had previously owned the penthouseboutique.com domain name until this fact was brought to its attention by the defendants during the course of the UDRP proceeding.
In addition to the licensed Penthouse Boutique retail stores, GMCI also licenses the operation of a branded online retail website at penthousestore.com. The penthousestore.com website launched on or about January 1, 2003, and has been continuously active since that date. From 2000 through 2003, GMCI licensed the operation of an e-commerce store at store.penthouse.com, an address which today forwards to penthousestore.com. In February, March, and April 2006, penthousestore.com received an average of 85,000 visitors each month. Through penthousestore.com, GMCI sells nearly 20,000 products, including branded apparel, DVDs, jewelry, and lotions.
The defendants own and operate internet-based businesses offering web design and hosting, domain name registration, and related services. The defendants are also in the business of registering domain names for profit. Indeed, the defendants have registered more than 1,400 domain names with the intention of using them to obtain revenue from third parties. Examples of domain names that they have registered include smithbarneycom.com, remingtonshotgun.com, avoncn.com, gmportal.com, foxv.com, allbarbies.com, t-mobiledealer.com and thedailyplanet.net.
On or about October 14, 2004, the defendants registered the domain name penthouseboutique.com through eNom, Inc., a domain name registrar. The defendants admit that the penthouseboutique.com domain name is not their legal name, nor could it be contended to be their nickname. Nevertheless, by no later than February 8, 2005, the defendants had offered the penthouseboutique.com domain name for rent or sale and promoted the services of Crazy Troll and Heu Enterprises Unlimited, Inc. on a web site posted at penthouseboutique.com. At that time, that site (in its entirety) read as follows:
Welcome to Heu Enterprises Unlimited the site you were looking for is awaiting or under development. Want to purchase this domain? If its for sale im sure we can come to terms:) use the Info Request link to the left please include the domain you were trying to reach. Have a Happy Safe Day:)
The defendants also subsequently used the penthouseboutique.com domain name in conjunction with a landing page/linking portal containing numerous links to third party web sites that were generated by the domain traffic monetization service information.com or its affiliates. The landing pages placed at the penthouseboutique .com domain name specifically referenced GMCI’s licensed Penthouse and Penthouse Boutique marks, including a reference to the Penthouse Boutique retail store in Hartford, Connecticut.
In or around April 2005, GMCI became aware that the defendants had registered the penthouseboutique.com domain name. However, the defendants have no affiliation with GMCI and have never been authorized to use or register the Penthouse marks or the domain name penthouseboutique.com. Accordingly, at that time, GMCI sent a demand letter to the defendants regarding their unauthorized registration of the penthouseboutique.com domain name and their use of the Penthouse marks.
In February 2006, GMCI again notified the defendants that the penthouseboutique.com domain name infringed on its mark. As a result, the defendants redirected the penthouseboutique.com website so that it did not resolve to any web page. Previously, however, the landing pages placed at the penthouseboutique.com domain name had directed web users to a variety of internet websites almost totally unrelated to GMCI, the Penthouse marks, or the Penthouse Boutique, including links to websites concerned with travel, entertainment, finance, business, and pornography. The defendants contend that this generated only $8.35 in revenue for them.
On February 28, 2006, GMCI filed a complaint under the UDRP with the NAF with the objective of retrieving the penthouseboutique.com domain name. The defendants opposed the complaint and claimed reverse domain name hijacking by GMCI. As is customary in UDRP proceedings, the case was submitted on the pleadings alone.
On May 26, 2006, an NAF panel consisting of a single panelist reissued the UDRP Decision. In its decision, the panel declined to transfer the penthouseboutique.com domain name to GMCI and found that GMCI had acted in bad faith in bringing the proceeding and had engaged in reverse domain name hijacking.
A. Summary Judgment
Under Federal Rule of Civil Procedure 56(c), summary judgment is appropriate only when:
the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
In deciding a motion for summary judgment, the court must “view the evidence in the light most favorable to the party against whom summary judgment is sought and … draw all permissible inferences in favor of that party.” Fischl v. Armitage, 128 F.3d 50, 55 (2d Cir.1997). The Court also must accept as true the non-moving party’s evidence, if supported by affidavits or other evidentiary material. See Kulak v. City of New York, 88 F.3d 63, 70 (2d Cir.1996). Assessments of credibility, choosing between conflicting versions of the events, and the weighing of evidence are matters for the jury, not for the court. Fischl, 128 F.3d at 55. See also Fed.R.Civ.P. 56(e) 1963 advisory committee’s note. Thus, “[t]he court’s function is not to resolve disputed issues of fact but only to determine whether there is a genuine issue of material fact to be tried.” Fischl, 128 F.3d at 55.
To defeat a motion for summary judgment, the non-moving party cannot merely rely upon allegations contained in the pleadings that raise no more than “some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). Rather, the nonmoving party must offer “concrete evidence from which a reasonable juror could return a verdict in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986).
It is undisputed that the UDRP establishes an expedited arbitration procedure through which a trademark owner can obtain the transfer or cancellation of a domain name. To ensure its universal applicability, the UDRP is incorporated by reference into all domain name registration agreements of registrars governed by ICANN, thereby requiring their domain name registrants to submit to the proceedings.
The UDRP process has been described as “adjudication lite” because the proceedings are handled entirely upon written submissions and the arbitration panel has total discretion to determine the application of precedent and rules of evidence. See Barcelona.com, Inc. v. Excelentisimo Ayuntamiento de Barcelona, 330 F.3d 617, 624 (4th Cir.2003). The UDRP decisions are not binding on the courts. See, e.g., Broadbridge Media LLC v. Hypercd.com, 106 F.Supp.2d 505, 509 (S.D.N.Y.2000); Weber-Stephen Products Co. v. Armitage Hardware & Bldg. Supply, Inc., 54 U.S.P.Q.2d 1766, 1768 (N.D.Ill.2000). Indeed, the UDRP expressly contemplates independent judicial review of UDRP decisions. See Barcelona.com, 330 F.3d at 624 (citing UDRP ¶ 3(b)).
The Rules for UDRP proceedings (“Rules”) define reverse domain name hijacking as “using the Policy in bad faith to attempt to deprive a registered domain-name holder of a domain name.” Rules ¶ 1. The Rules further provide:
If after considering the submissions the Panel finds that the complaint was brought in bad faith, for example in an attempt at Reverse Domain Name Hijacking or was brought primarily to harass the domain-name holder, the Panel shall declare in its decision that the complaint was brought in bad faith and constitutes an abuse of the administrative proceeding.
Rules ¶ 15(e).
For a complainant to prevail in a UDRP proceeding, it must prove that (i) the registrant’s domain name is “identical or confusingly similar to a trademark or service mark in which the complainant has rights,” (ii) the registrant has “no rights or legitimate interests” in the domain name, and (iii) the registrant’s domain name “has been registered and is being used in bad faith.” UDRP ¶ 4(a)(i)-(iii). Here, the defendants’ registration and use of the penthouseboutique.com domain name met all three prongs of this test.
First, in the UDRP Decision, the panel found that the penthouseboutique.com domain name is “legally identical” to GMCI’s Penthouse Boutique mark. As noted earlier, GMCI began to use that mark as early as June 2003, when the first Penthouse Boutique store opened. GMCI also owns a federal trademark registration in the mark in design, filed on June 19, 2003, which serves as GMCI’s constructive date of first use under Section 7(c) of the Lanham Act,
15 U.S.C. § 1057(c). Both the UDRP and federal case law make clear that the addition of a “.com” suffix does not serve to distinguish the domain name from the mark. See, e.g., Brookfield Commc’ns, Inc. v. West Coast Entm’t Corp., 174 F.3d 1036, 1055 (9th Cir.1999); N.Y.S. Soc’y of Certified Pub. Accountants v. Eric Louis Assocs., Inc., 79 F.Supp.2d 331, 340-42 (S.D.N.Y.1999); Freeman v. Mighty LLC, WIPO Case No. D2005-0263, ¶ 6(A). It similarly is insufficient to add a generic term, such as “store” or “boutique,” to a well-known mark. See, e.g., Prime Publishers, Inc. v. Am.-Republican, Inc., 160 F.Supp.2d 266, 280 (D.Conn.2001) (“We do not believe the Defendant’s addition of a generic or geographic term … is sufficient to distinguish the domain name from Plaintiff’s protected mark.”); Howell Edwin, WIPO Case No. D2005-0980, ¶ 6(A) (“There are several WIPO UDRP decisions stating that confusing similarity, for the purposes of the [UDRP], is established when a domain name wholly incorporates a complainant’s mark and only adds a generic word.”).
Accordingly, because GMCI’s rights in the Penthouse mark were well-established and the defendants’ domain name was, at a minimum, confusingly similar, the first element of the UDRP test has been satisfied in this case.
Turning to the second element, because GMCI’s adoption and extensive use of the Penthouse marks predated the first use of the penthouseboutique.com domain name by defendants, Crazy Troll had the burden in the UDRP proceeding to establish its rights or legitimate interest in the penthouseboutique.com domain name. See, e.g., PepsiCo, Inc. v. Perez Lista, WIPO Case No. D2003-0174, ¶ 6(b) (“Since the adoption and extensive use by the Complainant of the trademark PEPSI predates the first entry of [the domain names], the burden is on the Respondent to establish the Respondent’s rights or legitimate interests the Respondent may have or have had in the domain name.”); PepsiCo, Inc. v. Forum LLC, WIPO Case No. D2005-0737, ¶ 6(B) (same).
The UDRP lists three circumstances in which an alleged cybersquatter could prove the existence of rights or legitimate interests:
(i) before any notice to you of the dispute, your use of, or demonstrable preparations to use, the domain name or a name corresponding to the domain name in connection with a bona fide offering of goods or services; or
(ii) you (as an individual, business, or other organization) have been commonly known by the domain name, even if you have acquired no trademark or service mark rights; or
(iii) you are making a legitimate noncommercial or fair use of the domain name, without intent for commercial gain to misleadingly divert consumers or to tarnish the trademark or service mark at issue.
UDRP ¶ 4(c).
The defendants admit that the penthouseboutique.com domain name is neither their legal name, nor their nickname. There also is no relationship between the defendants and GMCI, which has not licensed the defendants or given them any other permission or consent to use the Penthouse marks.
The defendants also have not used the domain name penthouseboutique.com, or a name corresponding thereto, in connection with a bona fide offering of goods or services or made any legitimate noncommercial use of the domain name. Rather, the defendants are in the business of registering domain names and of using domain names for profit through various domain name traffic monetization arrangements. Indeed, the defendants have registered over 1,400 domain names of incorporated famous names and marks belonging to others and have monetized many of these domain names to obtain “click-through” revenue from web traffic to linking portals posted at those domain names.
In addition, UDRP decisions establish that an attempt to profit from web traffic diverted to a web site at a domain name is not a legitimate noncommercial use. See, e.g., Gen. Elec. Co. v. Networking Mktg., WIPO Case No. D2005-1064, ¶ 6(B) (“Since the … marks and names are well known and Respondent has no rights in them, the only reason why Respondent could have wanted to register and use a domain name incorporating the composite mark … was not for any legitimate noncommercial or fair use purpose, but rather because it wanted to use Complainant’s famous mark in order to profit from the web traffic it would generate from consumers.”); Drake Bliss v. Cyberline Enters., WIPO Case No. D2001-0718, ¶ 6(C) (same). Here, of course, there is evidence that this is precisely what the defendants sought to do.
For these reasons, GMCI has also met the second element of the UDRP test.
Finally, prior to bringing the UDRP proceeding, GMCI plainly had reason to believe that the defendants had registered and used the penthouseboutique.com domain name in bad faith. The UDRP sets forth a non-exhaustive list of factors which may evidence bad faith, including evidence that the domain name was obtained (i) primarily for resale, license, or lease; (ii) to prevent another from registering it; (iii) to disrupt the business of a competitor; or (iv) to create a likelihood of confusion as to the complainant’s sponsorship, endorsement, or involvement with the registrant. See UDRP ¶ 4(b)(i)-(iv). UDRP decisions also have found that the element of bad faith is met when (i) a registrant uses a domain name to divert web traffic to a linking portal for profit; (ii) a registrant attempts to sell the domain name for a price in excess of its out-of-pocket costs; (iii) a domain name is obviously connected with a well-known product but the registrant has no connection to the product; or (iv) a registrant owns multiple domain names which are comprised of unaffiliated, well-known business entities. See, e.g., Hilton Group plc v. Forum LLC, WIPO Case No. D2005-0244, ¶ 6(C) (use of domain name to attract users for commercial gain is evidence of bad faith); Volvo Trademark Holding AB v. Dinoia, WIPO Case No. D2004-0911, ¶ 6(C) (use of domain name to provide sponsored results falls “squarely within the terms of paragraph 4(b)(iv)” of the UDRP); Royal Bank of Canada v. Namegiant.com, WIPO Case No. D2004-0642, ¶ 6(C) (“The language at such site-‘This domain is for sale’-clearly suggests that Respondent registered the domain name primarily for the purpose of selling it to Complainant or to one of its competitors for valuable consideration in excess of Respondent’s out-of-pocket expenses.”); Veuve Clicquot Ponsardin v. Polygenix Group Co., WIPO Case No. D2000-0163, ¶ 6 (where a domain name “is so obviously connected with such a well-known product … its very use by someone with no connection with the product suggests opportunistic bad faith”); Stella D’oro Biscuit Co. v. Patron Group, Inc., WIPO Case No. D2000-0012, ¶ 5(c) (finding bad faith where respondent held domain names confusingly similar to well-known trademarks). Here, as set forth above, there is abundant evidence that the defendants fall into at least several of these categories. Accordingly, the third element of the test has also been satisfied.
Obviously, if there was evidence that established-or even arguably established-all three elements of the UDRP test, GMCI could not have brought its proceeding in bad faith as the sole panelist found. [FN1] There further was no basis for a finding that GMCI engaged in reverse domain name hijacking in violation of the UDRP by bringing the UDRP proceeding against Crazy Troll.
[FN1] GMCI indicates that the panelist found to the contrary on the basis of certain failed settlement talks between GMCI and the defendants and GMCI’s failure to disclose those talks. (See GMCI Mem. at 18). This was error. Neither the UDRP nor the Rules requires settlement negotiations to be disclosed to the UDRP panel during the proceeding. See, e.g., Elite Model Mgmt. Corp. v. Perkins, WIPO Case No. D2006-0297, ¶ 3. Even if that were not the rule, it was not unreasonable for GMCI to believe that there was no such duty of disclosure. See, e.g., Fed.R.Evid. 408 (evidence of settlement negotiations inadmissible to prove liability for or invalidity of a claim or its amount).
In addition to the UDRP, the Anticybersquatting Consumer Protection Act (“ACPA”) contains two provisions relevant to alleged reverse domain name hijacking by a trademark owner. The first such provision of the ACPA provides:
If a registrar, registry, or other registration authority takes an action described under clause (ii) based on a knowing and material misrepresentation by any other person that a domain name is identical to, confusingly similar to, or dilutive of a mark, the person making the knowing and material misrepresentation shall be liable for any damages, including costs and attorney’s fees, incurred by the domain name registrant as a result of such action. The court may also grant injunctive relief to the domain name registrant, including the reactivation of the domain name or the transfer of the domain name to the domain name registrant.
15 U.S.C. § 1114(2)(D)(iv). An “action,” in turn, is defined in the ACPA as “any action of refusing to register, removing from registration, transferring, temporarily disabling, or permanently canceling a domain name” done in compliance with a court order under Section 43(d) of the Lanham Act or through the implementation of a reasonable policy that is consistent with the purposes of trademark law, such as the UDRP. 15 U.S.C. § 1114(2)(D)(ii).
This provision plainly is inapplicable because GMCI did not make any knowing or material misrepresentations in connection with the UDRP proceeding. To the contrary, GMCI had evidence suggesting that (i) the penthouseboutique.com domain name was identical or confusingly similar to GMCI’s Penthouse and Penthouse Boutique marks; (ii) the defendants had no rights or legitimate interests in the penthouseboutique.com domain name; and (iii) the defendants had registered and used the penthouseboutique.com domain name in bad faith.
The second ACPA provision relevant to alleged reverse domain name hijacking provides:
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.
15 U.S.C. § 1114(2)(D)(v). This provision also is inapplicable because there has been no action taken which is adverse to Crazy Troll and because the defendants have not filed any action to establish that its registration and use of the domain name were not unlawful.
For the foregoing reasons, GMCI’s motion for partial summary judgment on its fifth cause of action is granted and the Court declares that GMCI did not initiate or pursue the UDRP proceeding or this action in bad faith and has not engaged in actual or attempted reverse domain name hijacking.
Because this memorandum decision addresses only one of GMCI’s claims, the Court will hold a conference in Courtroom 20A on January 23, 2006, at 6 p.m.