Fallout from 9th Circuit’s “nuclear option” on cybersquatting secondary liability

Did the 9th Circuit’s opinion last week in Petroliam Nasional Berhad v. GoDaddy.com  (9^th Cir. Dec. 4, 2013) really “kill” secondary liability for trademark infringement under the Anticybersquatting Consumer Protection Act (ACPA)?  Or did the court merely, as seems to be the case, engage in a bit of overkill?

Here’s Jane Coleman‘s take on it:

As our book speeds its way to the printer, the Ninth Circuit has made sure we will have a lot to discuss on this blog and in the upcoming supplement to Secondary Trademark Infringement.  Last week it held there is no cause of action for contributory cybersquatting under the ACPA, exercising the nuclear option on a body of case law that says such claims are valid when they involve fact patterns this sweeping decision ignores. . . .

Viewed against this backdrop of jurisprudence distinguishing mere registrars from complicit actors, the Ninth Circuit’s decision is hard to understand. The court simply declined to address the issues raised in cases like Verizon Cal. when it affirmed the district court’s grant of summary judgment in favor of GoDaddy.  Instead it said this:

Extending liability to registrars or other third parties who are not cybersquatters, but whose actions may have the effect of aiding such cybersquatting, would expand the range of conduct prohibited by the statute from a bad faith intent to cybersquat on a trademark to the mere maintenance of a domain name by a registrar, with or without a bad faith intent to profit.

2013 WL 6246460 at *3 (emphasis added).

None of the foregoing cases has even remotely suggested that secondary liability would extend to such “rote” activity as the “mere maintenance of a domain name.” In the much more relevant contexts where contributory liability presumably would lie, the courts have made clear that a cause of action for contributory cybersquatting would reach precisely the defendants whose conduct the Act was meant to prohibit – those who are complicit actors in cybersquatting schemes.

Read the whole post; then buy the book from Bloomberg BNA!  (It’s only available for pre-order right now, which is why you haven’t seen the big splashy announcement here yet.)

In theory, when faced with such a case, a court in the Ninth Circuit will want to say that the Petroliam Nasional case decision didn’t go that far.  The problem is that the plain language in the opinion appears to … go that far.   The result will be meritorious claims under the Verizon Cal. line of cases being dismissed, or weird workarounds that will distort jurisprudence even more unless and until the Circuit itself reconsiders this opinion (en banc or otherwise).

Alternatively, and less pleasant to contemplate, the Ninth may eventually correct itself without admitting any mistake on its part — the way the Second Circuit did in Rescuecom, pretending that its decision in 1-800 Contacts couldn’t possibly be read to suggest that keyword advertising did not constitute trademark use, even though that’s how pretty much every court in the Second Circuit, and elsewhere, read it.

Their mistake; everyone else’s fallout — an old story.  The question here, though, is:  Why?  The District Court, as Jane points out in her full blog post, had found that the claim failed, on summary judgment, on evidentiary grounds.  Whatever happened to judicial restraint, which would have resulted here in a perfectly acceptable “we need not reach the question of whether there is a viable claim for secondary liability under the ACPA?” — even, if the Circuit wanted to say more, followed by a bit of analysis as to why it’s a question.

Unfortunately the Ninth Circuit went beyond dictum here, it seems, affirmatively deciding a question it didn’t have to and doing so with unfortunately overbroad language that’s likely to cause a lot of litigation confusion.  Ka-boom!

Originally posted 2013-12-12 09:44:53. Republished by Blog Post Promoter