Petroliam Nasional Berhad v. GoDaddy.com, Inc.

Filing 155

Brief Supplemental re Contributory Cybersquatting filed byPetroliam Nasional Berhad. (Clark, Perry) (Filed on 12/15/2011)

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PERRY R. CLARK, State Bar No. 197101
LAW OFFICES OF PERRY R. CLARK
825 San Antonio Road
Palo Alto, CA 94303
Telephone: [phone]
Facsimile: [phone]
[e-mail]
Attorney for Plaintiff
PETROLIAM NASIONAL BERHAD (PETRONAS)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
OAKLAND DIVISION

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PETROLIAM NASIONAL BERHAD
(PETRONAS),

CASE NO: 09-CV5939 PJH (MEJ0

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Plaintiff,
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vs.

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GODADDY.COM, INC.,

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Defendant.

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SUPPLEMENTAL BRIEF OF
PLAINTIFF PETROLIAM NASIONAL BERHAD
REGARDING CONTRIBUTORY CYBERSQUATTING

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SUPP. BR. OF PETRONAS
CASE NO.: 09-CV-5939 PJH (MEJ)

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INTRODUCTION
The judicially created doctrine of contributory trademark infringement extends liability to
a defendant who knowingly supplies an instrumentality used by a third party to commit
trademark infringement. Congress created a cause of action for trademark infringement based on
cybersquatting by adding Subsection 43(d) to the Trademark Act (15 U.S.C. §1125(d)) when it
enacted the “Anticybersquatting Consumer Protection Act,” or “ACPA” in 1999. As a result, a
cause of action for contributory cybersquatting exists where a defendant contributes to a third
party’s trademark infringement arising out of that party’s cybersquatting under 15 U.S.C.
§1125(d).
No appellate court has explicitly addressed the existence of a cause of action for
contributory cybersquatting and no court at any level has ever held that a cause of action for
contributory cybersquatting does not exist. Nonetheless, five district courts have issued
opinions—all on motions to dismiss—involving the viability of claims for contributory
cybersquatting. And in each case, the district court unmistakably acknowledged the existence of
a cause of action for contributory cybersquatting.
The opinions of the five district courts are well-reasoned and substantially supported. In
particular, the courts’ unanimous recognition of a cause of action for contributory cybersquatting
is supported by both Supreme Court and Circuit Court case law governing contributory
trademark infringement as well as the plain language and legislative history of the ACPA.
Examination of available information does not indicate that any of the cases progress
significantly past the motion to dismiss stage and instead were dismissed due to the parties’
settlement or other reasons.
At all events, there is simply no reason for this court to be the first—and only—court to
hold that a cause of action for contributory cybersquatting does not exist.

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SUPP. BR. OF PETRONAS
CASE NO.: 09-CV-5939 PJH (MEJ)

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I.

Contributory Liability Applies to Trademark Violations Because They Are Species
Of Common Law Tort
The Trademark Act does not directly address contributory trademark infringement, which

is a judicially created doctrine that derives from the common law of torts. Tiffany (NJ) Inc. v.
eBay, Inc., 600 F.3d 93 (2nd Cir. 2010). The Supreme Court’s most recent treatment of
contributory trademark infringement establishes that “if a manufacturer or distributor
intentionally induces another to infringe a trademark, or if it continues to supply its products to
one whom it has reason to know is engaging in trademark infringement, the manufacturer or
distributor is contributorily responsible for any harm done as a result of the deceit.” Imwood
Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 854, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982).
In determining “how this doctrine applies to people who do not actually manufacture or
distribute goods,” the Seventh Circuit has “treated trademark infringement as a species of tort
and turned to the common law to guide our inquiry into the appropriate boundaries of liability.”
Hardrock Café Licensing Corp. v. Concession Services, Inc., 955 F.2d 1143, 1148-49 (7th Cir.
1992). In so doing, the Seventh Circuit concluded that the common law of torts dictates that a
defendant who is a landlord or licensor of spaces at a flea market “is responsible for the torts of
those it permits on its premises ‘knowing or having reason to know that the other is acting or will
act tortuously.’” Id. As a result, the Seventh Circuit held that “[t]he common law, then, imposes
the same duty on landlords and licensors that the Supreme Court has imposed on manufacturers
and distributors [and a defendant] may be liable for trademark violations by [a third party] if it
know or had reason to know of them.” Id.
The Ninth Circuit adopted the Seventh Circuit’s Hardrock tort-based test to hold that a
flea market operator that “supplied the necessary marketplace for the sale of infringing products .
. . is responsible for the torts of those it permits on its premises ‘knowing or having reason to
know that the other is acting or will act tortuously.’” Fonovisa, Inc. v. Cherry Auction, Inc., 76
F.3d 259, 265 (9th Cir. 1996) (an operator of a flea market “cannot disregard its vendors’ blatant
trademark infringements with impunity.”).

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CASE NO.: 09-CV-5939 PJH (MEJ)

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Based on the holdings in Hardrock and Fonovisa, the Ninth Circuit recognized that
liability for contributory trademark infringement could extend beyond “the convenient ‘product’
mold dealt with in Imwood Lab.” Lockheed Martin Corp. v. Network Sols., Inc., 194 F. 3d 980,
984 (9th Cir. 1999). Specifically, the Ninth Circuit determined in Lockheed that where a
defendant exercises “direct control and monitoring of the instrumentality used by a third party to
infringe the plaintiff’s mark [it is] permi[ssible to] expan[d] Imwood Lab.’s ‘supplies a product
requirement’” to hold the defendant liable for contributory trademark infringement. Id. While
the Court found that the defendant in Lockheed was not liable for contributory trademark
infringement, it nonetheless acknowledged the existence of a cause of action for contributory
trademark infringement in the context of internet domain name registration.

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In the more than two decades since the Ninth Circuit’s decision in Lockheed, decisions of
both the Ninth Circuit and other Circuits have consistently recognized a cause of action for
contributory trademark infringement without departing from the original premise that its
boundaries are defined based on common law principles of tort liability. Tiffany (NJ) Inc. v.
eBay, Inc., 600 F.3d 93 (2nd Cir. 2010) (“contributory trademark infringement is a judicially
created doctrine that derives from the common law of torts” because “trademark infringement is
a species of tort”); Louis Vuitton Malletier, S.A. v. Akanoc Sols., Inc., —F.3d—(9th Cir. 2011);
Perfect 10, Inc. v. visa Int’l., 494 F.3d 788 (9th 2007).

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II.

Cybersquatting Is No Different Than Any Other Trademark Violation For Purposes
Of Contributory Infringement

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By its plain language, the ACPA establishes a cause of action for trademark infringement

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based on cybersquatting. 15 U.S.C. §1125(d)(1)(a) (“A person shall be liable in a civil action by

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the owner of a mark . . . if . . . that person has a bad faith intent to profit from that mark . . . and

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registers, traffics in, or uses a domain name that . . . is identical of confusingly similar to that

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mark.”). In so doing, Section 1125(d) uses identical language to provide a cause of action for

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trademark infringement based on cybersquatting as Section 1125(a) uses to provide a cause of

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action for trademark infringement based on false designation of origin. 15 U.S.C. §1125(a)(1)

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(“Any person who . . . shall be liable in a civil action.”).
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CASE NO.: 09-CV-5939 PJH (MEJ)

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The legislative history of the ACPA demonstrates Congress’ intent to create a cause of
action for trademark infringement based on cybersquatting when it added Section 1125(d) to the
Trademark Act. Specifically, in reporting on the substitute amendment that was ultimately
added as Section 1125(d), the Senate Judiciary Committee stated that the amendment “allows
trademark owners to recover statutory damages in cybersquatting cases [and] sets forth a
substantive cause of action, based in trademark law . . .with respect to cybersquatting.” Senate
Report No. 106-140 (1999) at 6. In addition, the same report describes future Section 1125(d) as
amending “the Trardemark Act to provide an explicit remedy for cybersquatting.” Id. at 8.

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In addition, the legislative history establishes that Congress recognized—and intended to
maintain—secondary liability for cybersquatting. In particular, Congress described the “safeharbor” from liability for registrar’s in Section 1114(d)(iii) as “codifying current case law
limiting the secondary liability of domain name registries and registrars for the act of registration
of a domain name.” Senate Report No. 106-140 (1999) at 8. In so doing, Congress expressly
acknowledge the existence of secondary liability for cybersquatting. Had Congress intended to
eliminate a cause of action for contributory cybersquatting, or one did not exist, Congress would
not have included Section 1114(d)(iii) in the ACPA or the foregoing statement in the legislative
history.

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Like Congress, at least one commentator has recognized that cybersquatting is type of
trademark infringement. McCarthy on Trademarks and Unfair Competition, Chapter 25 (Vol. 4)
“Types of Trademark Infringement; III. Types of Infringing Usuage: §25.78 Federal
Anticybersquatting Act: trademarks.”

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III.
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The Decisions Of Five District Courts Acknowledging A Cause Of Action For
Contributory Cybersquatting Are Exceedingly Persuasive Evidence Of The
Existence of Such A Cause Of Action
In applying the foregoing, the five district decisions regarding the viability of claims for

contributory cybersquatting strongly indicate the existence of a cause of action for contributory
cybersquatting.

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Of the five, three Courts held that the plaintiff had sufficiently pled a cause of action for
contributory cybersquatting to survive a motion to dismiss: (1) Microsoft Corp. v. Shah, 2011
WL 108954, *3 (W.D. Wash. 2011) (“Defendants’ Amended Motion to Dismiss claims for
contributory cybersquatting, contributory dilution, and the claims against Rivera is DENIED.”);
(2) Transamerica Corp. v. Moniker Online Svcs., 672 F. Supp.2d 1353, 1367 n. 12 (S.D. Fla.
2009) (“Transamerica has pled sufficient inducement, knowledge, and control by the John Doe
defendants to state a claim for contributory cybersquatting.”); and (3) Solid Host, NL v.
Namecheap, Inc., 652 F. Supp.2d 1092, 1117 (C.D. Cal. 2009) (“[t]he court concludes that
[plaintiff] Solid Host has alleged sufficient facts to plead a claim for contributory liability for
cybersquatting.”).
The two remaining district courts recognized the existence of a cause of action for
contributory cybersquatting but found that the plaintiff had failed to plead adequate facts to avoid
dismissal. Ford Motor Co. v. Greatdomains, Inc., 177 F. Supp.2d 635, 647 (E.D. Mich. 2001)
(the contributory trademark analysis in the “flea-market” context “arguably couble be applied to
allegations of cybersquatting.”); Baidu, Inc. v. Register.com, Inc., 760 F. Supp.2d 312, 321
(S.D.N.Y. 2010) (rejecting “registrar immunity” in ACPA for secondary liability and applying
test that “for a service provider to be liable for the infringing acts of another, it must know of
have reason to know of the infringement.”).
Microsoft Corp. v. Shah
The district court’s opinion in Microsoft Corp., 2011 WL 108954, *3, dealt most directly
with the question of whether a cause of action for contributory cybersquatting exists because—
unlike in any of the other cases—the defendants specifically argued that such a cause of action
did not exist. Id. (“Defendants have moved to dismiss Plainitff’s claims for contributory
cybersquatting and contributory dilution, arguing such causes of action do not exist.”).
In rejecting the Defendants’s arguments, the Microsoft court acknowledged that “[t]he
cause of action of contributory cybersquatting has neither been explicitly addressed by an
appellate court nor by statute.” Id. at *2-3. The court, however, continued by observing that

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“[t]he Lanham Act itself does not expressly address causes of action for contributory liability
[and] nonetheless, the court-made doctrine of contributory liability for trademark infringement is
well established.” Id. at *2-3 (“courts have simply applied the traditional principles of tort law to
impose liability on those who have assisted with or contributed to infringement), citing
Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996). The Microsoft court
held that “both trademark infringement and cybersquatting are tort-like causes of action to which
the theory of contributory liability would appear to be naturally suited.” Id. at 3. In addition,
the Microsoft court pointed to Ford, 177 F. Supp.2d at 635, 646-47, and Solid Host, 652 F.
Supp.2d at 1117, as “two decisions [that], along with the case at hand reveal the relevance of the
cause of action for contributory cybersquatting.” Id. * 2. Accordingly, the Microsoft case
further demonstrates the existence of a cause of action for contributory cybersquatting based on
the “tort-based” approach of Imwood, Hardrock, and Fonovisa.
As far as can be determined from the docket, the Microsoft case settled soon after the
court denied the motion to dismiss plaintiff’s cybersquatting claims.
Transamerica Corp. v. Moniker Online Svcs.
Like the court in Microsoft, the court in Transamerica Corp. v. Moniker Online Svcs.,
672 F. Supp.2d 1353, 1367 n. 12 (S.D. Fla. 2009), held that the plaintiff had stated a cause of
action for contributory cybersquatting. As with the Microsoft case, it appears that the
Transamerica case settled shortly after the Court denied the defendants’ motion to dismiss.
Solid Host, NL v. Namecheap, Inc.
In addition to holding that the plaintiff had stated a claim for contributory cybersquatting,
the Solid Host court pointed to Ford Motor Co., 177 F. Supp.2d at 647, as among the “Courts
that have applied this theory [of contributory trademark liability] to cybersquatting claims under
the ACPA.” Solid Host, NL v. Namecheap, Inc., 652 F. Supp.2d 1092, 1117 (C.D. Cal. 2009).
Ford Motor Co. v. Greatdomains, Inc.
Although the court in Ford found that the plaintiff had failed to plead adequate facts to
avoid dismissal of it contributory cybersquatting claim, the court nonetheless acknowledged that

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contributory liability “arguably could be applied to allegations of cybersquatting.” Ford Motor
Co. v. Greatdomains, Inc., 177 F. Supp.2d at 647.
Baidu, Inc. v. Register.com, Inc.
Finally, in Baidu, Inc. v. Register.com, Inc., 760 F. Supp.2d 312, 321 (S.D.N.Y. 2010),
the court did not explicitly refer to the plaintiff’s claim as for “contributory cybersquatting. But
the court’s analysis reveals that it recognized a cause of action for contributory cybersquatting
despite its conclusion that the plaintiff failed to state a claim.

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CONCLUSION
For the foregoing reasons, and those set forth in plaintiff’s other pleadings on the issue,
plaintiff respectfully submits that a cause of action exists for contributory cybersquatting.

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Respectfully Submitted,
LAW OFFICES OF PERRY R. CLARK

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/S/
Perry Clark

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