IN
THE UNITED STATES DISTRICT COURT
FOR
THE EASTERN DISTRICT OF VIRGINIA
Alexandria
Division
HEATHMOUNT
A.E. CORP.,
Plaintiff,
v.
TECHNODOME.COM,
an
Internet domain name,
Case No. CA-00-00714-A
and
DESTINATIONTECHNODOME.COM,
an
Internet domain name,
Defendants.
In accordance with the accompanying Memorandum Opinion, is hereby ORDERED
that:
1) Defendant
domain names’ Motion to Dismiss is DENIED;
2) the Clerk
of the Court shall forward copies of this Order and the accompanying Memorandum Opinion to
all counsel of record.
December
29, 2000 UNITED
STATES DISTRICT COURT JUDGE
Alexandria,
Virginia
IN
THE UNITED STATES DISTRICT COURT
FOR
THE EASTERN DISTRICT OF VIRGINIA
Alexandria
Division
HEATHMOUNT
A.E. CORP.,
Plaintiff,
v.
TECHNODOME.COM,
an
Internet domain name,
Case No. CA-OO-OO714-A
and
DESTINATIONTECHNODOME.COM,
an
Internet domain name,
Defendants.
This
matter to is before the Court on Defendants' Motion to Dismiss Plaintiff’s Complaint.
For the reasons set forth below, the Motion is DENIED.
I.
Background
On
April 28, 2000, Plaintiff, Heathmount A.E. Corporation, a Canadian corporation, filed an in
rem action with this Court. Plaintiff alleges cyberpiracy, in violation of the
Anticybersquatting Consumer Protection Act ("the ACPA"), U.S.C. § 1125(d).
Defendants are two domain names, TECHNODOME.COM and DESTINATIONTECHNODOME.COM, which are
registered with Network Solutions, Inc. ("NSI").
Plaintiff
is an entertainment company currently developing projects in Montreal, Montreal, Quebec,
and Queens, New York, that uses the trademarks and service-marks "TECHNODOME"
and "DESTINATION: TECHNODOME." Marketing, advertising, and the distribution of
related goods, promotional items and services commenced in 1997.
Plaintiff alleges that on June 2, 1998, the challenged domain names were registered by Elliott Salmons ("Registrant"), a resident of Ontario, Canada, which is an area where Plaintiff's projects have been well-publicized. Plaintiff alleges that these domain names were registered Win bad faith in an attempt to profit from use of Plaintiff's marks either to extort money from Heathmount or for sale to potential users which wish to take advantage of Heathmount's trademarks." (Complaint ¶15.)
In
a July 24, 2000, Memorandum Opinion ("Mem. Op."), this Court granted Plaintiff's
Motion for an Order, pursuant to 28 U.S.C. §1655 and Rule 4(n), requiring Defendant
domain names to appear or plead within twenty (20) days of personal service or be adjudged
in default. The Court determined that mere registration of the domain names in Virginia
was not a sufficient contact to establish personal jurisdiction over Registrant Salmons.
The Court also granted Plaintiff's Motion to deposit the disputed domain names in the
registry of the court.1
Defendants
filed a Motion to Dismiss on September 22, 2000, arguing that the Court lacks jurisdiction
in this matter because the in rem provisions of the ACPA are facially unconstitutional.
Defendants contend further that 28 U.S.C. §1655 does not provide an independent basis for
the Court's jurisdiction. Alternatively, Defendants seek dismissal on grounds of forum non
conveniens and international comity.
A Rule 12(b) (6) motion to dismiss tests the legal sufficiency of the complaint and should be granted only if it appears beyond doubt that the plaintiff can prove no set of facts in support of its claim which would entitle it to relief. De Sole v. United States, 947 F.2d 1169, 1177 (4th Cir. 1991); Rogers v. Jefferson-Pilot Life Ins. Co., 883 F.2d 324, 325 (4th Cir. 1989). In passing on a motion to dismiss, "the allegations of the complaint should be construed favorably to the pleader." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974] . Moreover, a motion to dismiss must be assessed in light of Rule 8's liberal pleading standards, which requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." F. R. Civ. P. 8. The complaint need only state sufficient facts to enable the defendant to draft a responsive pleading. See 5A Wright, Miller & Cooper, Federal Practice and Procedure 2d § 1357.
The
Anticybersquatting Consumer Protection Act, 15 U.S.C. §1125(d), permits the owner of a
mark to file an in rem civil action against a domain name that "violates any
right of the owner of a mark registered with the Patent and Trademark Office or protected
under subsection (a) and (c)" of §1125. Id. at §1125(d) (2) (A) (i). In
addition, Plaintiff must be unable to obtain in personam jurisdiction or through
due diligence not be able to find a person who would have been a defendant under paragraph
(I) of §1125(d). Id. at § 1125{d) (2) (A) (ii) . The proceeding may be filed in
the judicial district in which the domain name was registered. Id. at 5 1125(d) (2)
(A). The ACPA's in rem provisions were included to cure the problem of trademark
infringement by anonymous cybersquatters who in bad faith register a domain name that
violates a valid trademark but then prove beyond the reach of the U.S. courts. See
Sen. Rep. No. 106-140, at 4, 10 (1999) .
1. Defendants'
Constitutional Challenge to the ACPA
Defendants'
first argument is that dismissal is proper because the ACPA is unconstitutional, both
facially and as applied to the facts in this case. Registrant Elliott Salmons is a citizen
of Canada with no links to the United States besides registering the two domain names with
a Virginia corporation. As such, Defendants argue that application of the ACPA to the
domain names Salmons registered would violate the Due Process Clause of the Fifth
Amendment to the United States Constitution.
Defendants'
constitutional argument rests on the line of Supreme Court cases examining the minimum
contacts required by due process before a court can exercise in personam
jurisdiction over a defendant. See International Shoe Co. v. Washington, 326 U.S.
310 (1945); Shaffer v. Heitner, 433 U.S. 186 (1977). If a party has few or no
contacts with the forum, the forum court may not require that party to appear in the forum
or actively defend his interest in the res, based on the existence of in rem
jurisdiction alone. Johnson v. Arbitrium Handels AG, 198 F.3d 342, 348 (2d
Cir.1i999). "Forcing this burden upon a party without minimum contacts with the forum
state is precisely what is forbidden by International Shoe as 'offen[sive] to
traditional notions of fair play and substantial justice.'’ 326 U.S. at 316."
Still, in an in rem action involving an out-of-state party's rights with respect to
property in the forum state, the forum court ordinarily has the power to decide the case
insofar as it affects those rights, irrespective of whether there are sufficient contacts
to confer on the court in personam jurisdiction over the party. See Shaffer,
433 U.S. at 207-08.
Defendants
argue that the due process requirements of in personam jurisdiction restrict the
forum court's power, in an in rem action, over the person claiming an interest in
the challenged res. This principle was at the foundation of Shafffer v.
Heitner's recognition that due process applies equally, although differently, to in
personam and in rem actions. Shaffer, 433 U.S. at 207. As the Court in S h4ffer
acknowledged, however, the facts presented in that case did not raise--and the Court did
not consider--"the question whether the presence of a defendant's property in a State
is a sufficient basis for jurisdiction when no other forum is available to the
plaintiff." 433 U.S. at n.37. Registrant has declared that he has had virtually no
domain-name-related contacts with any other United States district and that he owns no
other assets in the United States. (Complaint at 5-6.) If true, personal jurisdiction over
him arguably could not be obtained anywhere in the United States.
This
is the point of true in rem actions, such as those round in admiralty law. See, e.g.,
Continental Grain Co. v. The Barge FBL-585, 364 U.S. 19, 23 (1960) (the purpose behind
the fiction that a vessel may be sued, as if it were itself a person, is "to allow
actions against ships where a person owning the ship could net be reached."). When a
person cannot be found but an interest in a property right is at stake, the law provides a
mechanism for adjudicating that right.
The
ACPA makes Defendants' analysis of the due process requirements for in personam
jurisdiction unnecessary, because it expressly establishes in rem jurisdiction [o
decide the proper disposition of the domain names themselves. Moreover, because the
instant suit is strictly an in rem action,2 due process limits on courts' power to exercise
their authority over the person would not bar the Court's exercise of jurisdiction here.
Sharper recognized that where property is the entire subject matter of the dispute, and
the suit is properly brought in rem, due process does not require a level of
contact with the forum sufficient for in personam Jurisdiction over the defendant.3
433 U.S. at 207-208. A lesser showing suffices.
Every
domain name is unique. See Network Solutions, Inc. v. Umbro Int'l, Inc., 259 Va.
759, 764, 529 S.E.2d 80, 82-83 (2000). For this reason, registration of a particular
domain name with an internet registry, such as NSI, creates an exclusive right to use and
control that name. Although rights to use and control are commonly associated with
property, Defendants contend that Congress exceeded its authority in implicitly deeming a
domain name property for purposes of bringing an in rem action. This argument was
rejected by the Court in Caesars World, Inc. v. Caesars-Palace.com, 112
F.Supp.2d 502 (E.D.Va. 2000), and the Court rejects it now for the same reasons. As Judge
Bryan observed, "[t]here is no prohibition on a legislative body making something
property. Even if a domain name is no more than data, Congress can make data property and
assign its place of registration as its situs." Id. at 504.
Defendants
argue further that because a domain name "is actually located worldwide,'" Reply
to Opp. to Motion to Dismiss at 5, Congress erred in locating the situs of the domain name
in the District where the domain name registry is located. 15 U.S.C. §1125(d) (2) (C)
(i). The Court rejects this argument. As the Court has already observed, while there is no
evidence the Defendant domain names are actually hosted in NSI's database, NSI does
maintain a record of the domain names in its database. Mem. Op. at 17. Each domain name is
embodied in its database entry. Thus, under Section 1125(d) (2) (C) (i), venue will lie in
the District where the domain name registry is located and maintains its database. The
Eastern District of Virginia is a proper venue in this case, because the domain name
registry NSI is located in Herndon, Virginia.
Nor
does the remedy afforded by the ACPA offend due process. Cognizant of the requirements
imposed by due process, Congress struck a careful balance, limiting the victorious
plaintiff' s remedy to forfeiture or cancellation when the sole contact with the forum is
the registration of a domain name there. See H.R. Rep. No. 106-412 at 14 (October 25,
1999). Congress believed that, in this context, there is a sufficient minimum contact to
satisfy due process and allow a court to exercise in rem jurisdiction. See
Caesars World, 112 F.Supp.2d at 504.
Pointing
to the requirement in §1125(d) (I) (A) (I) that a plaintiff show the registrant had a bad
faith intent: to profit by registering the domain names, Defendants argue that the
putative in rem jurisdiction contemplated by the ACPA is merely in personam
jurisdiction without the due process safeguards. Because "property" cannot act
in bad faith, Defendants argue, due process requires a court to establish that it has
personal jurisdiction over the domain name’s owner before it can be consider whether
that owner acted in bad faith. Def. Supp. Mem. at 11. The Court disagrees. See Harrods
Ltd. V. Sixty Internet Domain Names, 110 F.Supp.2d 420 (E.D.Va. 2000); Broadbridge
Media, L..L.C. v. Hypercd.com, 106 E.Supp.2d 505 (S.D.N.Y. 2000). The ACPA
lists nine nonexclusive factors for the Court to consider when assessing a registrant's
alleged bad faith. 15 U.S.C. 1125(d) (i) (A) (ii}. The Court need not have In personam
iurisdiction over a registrant before it can assess whether registration of the domain
names was motivated by a bad faith intent to profit. For example, the Court can examine
whether the registrant has concealed his contact information, id. at §1125(d)
(1)(A) (ii) (vii), or determine whether the registrant has offered to sell the disputed
domain name to the trademark's owner. Id. at §1125(d) (ii (A) (ii) (VII).
As
noted above, the registrant of the Defendant domain names, Elliott Salmons, has no
connection with the Eastern District of Virginia--other than registering the domain names
with a registry located in Herndon, Virginia--and he is not subject to this Court's in
personam jurisdiction. See Mem. Op. at 20. However, Congress has determined
that where an internet domain name infringes a U.S. trademark, a suit to enforce the U.S.
intellectual property rights may proceed in rem in the District where the registry
is located. NSI, the company that registered the Defendant domain names, is located in the
Eastern District of Virginia. As such, the Court finds that in rem jurisdiction in
this district exists, 15 U.S.C. §1125(d) (2) (A), and that the statute allows a properly
narrow and constitutional exercise of that jurisdiction.
2.
Defendants' 28 U.S.C. §1655 Argument
Defendants
contend that the exercise of in rem jurisdiction in this case is improper under the
statute providing for in rem proceedings in federal court, 28 U.S.C. 1655.4
In the Fourth Circuit, before Section 1655 may be successfully invoked by a litigant,
three essential prerequisites must have been fulfilled: (i) the suit must be one to
enforce a legal or equitable lien upon, or claim to, the title to real or personal
property, or to remove some encumbrance, lien or cloud upon the title of such property;
(2} the proceeding must be in aid of some pre-existing claim, existing prior to the suit
in question, and not a proceeding to create for the first time a claim to the property as
the effect of the proceeding itself, (3) the property in question must have a situs within
the district in which suit is brought in a federal district court. McQuillen v.
National Cash Register Co., 112 F.2d 877, 880 (4th Cir. 1940) (interpreting the
predecessor to Section 1655).
As
Defendants argue, Section 1655, standing alone, does not create an in rem right of action,
but instead it provides a procedure by which to pursue a separate legal claim. See
Wright and Miller, Federal Practice and Procedure, §3634, p. 54.5
Plaintiff contends that in fact the ACPA itself creates the requisite pre-existing right.
That is a misinterpretation of the Fourth Circuit's position in McQuillen. As noted
above, the Court in McQuillen observed that a suit under Section 1655 must be one "to
enforce a legal or equitable lien upon, or claim to, the title to real or personal
property, or to remove some encumbrance, lien, or cloud upon the title of such
property." 112 F.2d at 880. That is not the case here.
Plaintiff
has no legal claim to the domain names at issue. It did not register the names nor
pay the registration fee for them. Plaintiff's legal right to bring this suit instead
stems from its interest in the U.S. trademarks infringed by the name. These are
fundamentally different interests.6 The
ACPA gives Plaintiff the right to challenge the infringement of its intellectual property
rights engendered by the registration of Defendant domain names, but it does not give
Plaintiff the sort of legal or equitable lien on the domain names equivalent to that
envisioned in McQuillen. Section 1655 does not provide the Court with jurisdiction
over Plaintiff's action in this case.
3.
Defendants'
Forum Non Conveiens and International Comity Arguments
Defendants
next argue that dismissal is proper for reasons of forum non conveniens and
international comity, which militate against a Virginia court's deciding the issues
presented here. A district court faced with an issue with repercussions beyond U,S.
borders should consider issues of comity in deciding whether to retain jurisdiction over a
case before it. "Comity, in the legal sense, is neither a matter of absolute
obligation, on the one hand, nor of mere courtesy and good will, upon the other." Hilton
v. Guyot, 113 U.S. 159, 163-64 (1895) . The doctrine of forum non conveniens allows
a district court, for the convenience of parties and witnesses and in the interest of
justice, to transfer any civil action to any other district or division where it might
have been brought.7
For
transfers to another federal district within the United States, 29 U.S.C. §1404(a)
generally governs, but for transfers from a United States district court to a forum
outside the United States, the common law rules of forum non conveniens remain in
place. Whether a motion to dismiss on the ground of forum non conveniens should be granted
or denied is a matter entrusted to the discretion of the district judge. Hodson v. A.H.
Robins, 715 F'.2d 142, 144 (4th Cir. 1983). Defendants describe the inconvenience to
Registrant Salmons of litigating the matter in the Eastern District of Virginia, including
the location in Canada of all witnesses and documents and the financial burden the
litigation would impose on him. These are factors to be weighed by the Court in its
exercise of discretion.
The Fourth Circuit has explained that "[a] forum non conveniens dismissal must be based on the finding that, when weighed against plaintiff’s choice of forum, the relevant public and private interests strongly favor a specific, adequate, and available alternative forum." Kontoulas v. A.H. Robins Co., 74b F.2d 312, 315 (4th Cir. 1984) (citing Veba-Chemie A.G. v. M/V Getafix, 711 F.2d 1243, 1245 (5th Cir. 1983)). The Supreme Court laid out specific factors to guide a forum non conveniens assessment in Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947):
An
interest to be considered, and the one likely to be most pressed, is the private interest
of the litigant. Important considerations are the relative ease of access to sources of
proof; availability of compulsory process for attendance of unwilling, and the cost of
obtaining attendance of willing, witnesses; . . . and all other practical problems that
make trial of a case easy, expeditious and inexpensive. There may also be questions as to
the enforceability of a judgment if one is obtained .... [U]nless the balance is strongly
in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed ....
Factors of public interest also have place in applying the doctrine .... There is an appropriateness, too, in having the trial of a diversity case in a forum that is at home with the state law that must govern the case, rather than having a court in some other forum untangle problems in conflict of laws, and in law foreign to itself.
330
U.S. at 508-09. See Rankine v. Rankine, 166 F.3d 333 (4th Cir. 1998).
Applying
these factors to the issue here, it is clear that if he chooses to defend his interest in
the domain names in the Eastern District of Virginia, Registrant Salmons will face a
financial burden. Litigating the matter in this District may also create problems of
access to proof. The parties, relevant witnesses and documents are in Canada. The Court
cannot compel unwilling witnesses in Canada to appear before it, and even willing
witnesses will face financial burdens if they participate in the litigation. However, the
Fourth Circuit has indicated that the balance of factors should "strongly" weigh
in favor of transfer, Kontoulas, 745 F.2d at 315, echoing the Supreme Court's
suggestion in Gulf Oil that the plaintiff's choice of forum should be respected, as
far as possible. As a general proposition, litigation is expensive and burdensome.
Registrant may face more hardship than most in that regard, but he has not shown that it
will literally be financially impossible to litigate in this District, nor that witnesses
and documents will be entirely unavailable here.
Moreover,
public factors bearing on the question lean toward retaining the matter in this District.
A Canadian court would be less familiar with the provisions of the ACPA than is this
Court. Even if it prevailed, Plaintiff might face difficulties enforcing the Canadian
court's judgment in the United States, which would arguably undercut its U.S. trademark
rights in its "technedome" mark.8 A trademark holder seeking
to enforce its U.S.-registered marks against infringing domain name registrants should not
be penalized in the exercise of those rights merely because the parties involved are not
United States citizens.
On
a more basic level, Plaintiff may not be able to assert the same rights in Canada, which
lacks a body of law equivalent to the ACPA and whose enforcement of its trademark laws
cannot extend into the United States. Defendants suggest that Canadian intellectual
property law, drawing upon recent English case law, might view the registration of a
trademark-infringing domain name as an actionable trademark violation. Def. Rep. to Opp.
at 8-9. This outcome is particularly likely, Defendants argue, in a case like the one at
bar, involving both registration and use of the mark. However, Defendants' prediction of
what the Canadian courts will do when presented with this issue is necessarily speculative
and provides little support for the argument that Canada is a satisfactory alternative
forum for this lawsuit.9
Defendants
also contend that another forum provides the same remedies for a victorious suitor as
those sought here, namely forfeiture or transfer of domain name that was registered in bad
faith: the Internet Corporation for Assigned Names and Numbers ("ICANN").10
Plaintiff initiated proceedings before ICANN in March 2000 but withdrew from those
proceedings upon receiving a preliminary ruling that the court selected to review the
outcome of the arbitration should be in Canada.11 This ruling was
contrary to Plaintiff's preference for review by the Eastern District of Virginia, which
was a permissible alternative under the ICANN rules. Plaintiff then filed the instant
lawsuit.
Plainly,
ICANN's dispute resolution proceedings are not equivalent to the formal consideration of a
cause by a court of record. ICANN dispute resolution does not provide parties with the
procedural safeguards supplied by a court proceeding. Moreover, ICANN lacks the
enforcement power of the court system. For these reasons, ICANN is not an adequate
substitute for this court's consideration of the issues presented here.
In
sum, Defendants have not overcome the presumption that favors the plaintiff's choice of
forum. See Piper Aircraft v. Reyno, 454 U.S. 235, 255 (1981). Accordingly, the
Court finds that dismissal on the grounds of comity and forum non conveniens is not
proper.
IV.
Conclusion
For
the above-stated reasons, Defendants' Motion to Dismiss is DENIED. An appropriate
Order will issue.
December,
29th, 2000
Alexandria,
Virginia
UNITED STATES DISTRICT COURT JUDGE
1 Heathmount A.E. Corp. v. Technodome.com,
106 F.Supp.2d 860 (E.D.Va. 2000).
2
This case is purely in rem,
as distinguished from the variants of quasi-in-rem jurisdiction discussed in
Shaffer. 433 U.S. at 199 n.17.
3 Defendant claims that the
"exceptional" circumstances present in this case change the analysis. The
registrant, a citizen of Canada with no links to the United States besides the
registration with a Virginia corporation of the two domain names, arguably has even fewer
ties to this forum than a more typical U.S. citizen-registrant would. However, this is an
in rem suit and the subject matter of the litigation is found in this forum, as
discussed infra. Those facts alone are sufficient to satisfy due process.
4
Title
28 U,S.C. ~ 1655 permits the institution of a limited class of cases in federal district
court without acquiring personal jurisdiction over the defendant by means of service of
process within the forum state. See 28 U.S.C.A. 1655 (West 1994); 14 Charles Allen Wright,
Arthur R. Miller, Edward H. Cooper, Federal Practice and Procedure § 3632. Specifically,
the statute provides:
In
an action in a district court to enforce any lien upon or claim to, or to remove any
incumbrance or lien or cloud upon the title to, real or personal property within the
district, where any defendant can not be served within the State, or does not voluntarily
appear, the court may order the absent defendant to appear or plead by a day certain.
Such
order shall be served on the absent defendant personally if practicable, wherever found,
and also upon the person or persons in possession or charge of such property, if any.
Where personal service is not practicable, the order shall be published as the court may
direct, not less than once a week for six consecutive weeks.
If an absent defendant does not appear or plead within the time allowed, the court
may proceed as if the absent defendant had been served with process within the State, but
any adjudication shall, as regards the absent defendant without appearance, affect only
the property which is the subject of the action, When a part of the property is within
another district, but within the same state, such action may be brought in either
district. Any defendant not so personally notified may, at any time within one year after
final judgment, enter his appearance, and thereupon the court shall set aside the judgment
and permit such defendant to plead on payment of such costs as the court deems just.
Id.
5 While Wright
and Miller suggest there is some division among the Circuits on whether Section
1655
alone can create a sufficient basis for suit, id. at 58, the Fourth Circuit is in
accord with Defendant's position. See McQuillen, 112 F.2d 877.
6 In contrast to the facts of this
case, Section 1655 has provided a cause of action to recover
other
intangible property where the plaintiff alleged an ownership interest in the intangible
property itself. See, e.g., Jellenik v. Huron Copper Mining Co., 177 U.S. 1 (1899)
(ownership interest in stocks); United States v. Metropolitan Life Ins. Co., 256
F.2d 17 (4th Cir. 1958) (ownership interest in life insurance policies).
7 The
Court finds that its discussion of forum non conveniens embraces any issues of comity that
might arise concerning forum selection.
8 Plaintiff's ability to enforce its
trademark rights in the United States is of particular importance
given
its use of the mark in connection with a theme park in Queens, New York.
9 The Court does not give this
factor conclusive weight in the analysis, see Piper Aircraft Co. v.
Reyno,
454 U.S. 235, 247 {1981), but considers it as one factor among several in the forum non
conveniens assessment.
10 According
to ICANN's web site:
All
registrars in the .com, .net, and .org top-level domains follow the Uniform Domain-Name
Dispute-Resolution Policy (often referred to as the "UDRP"). Under the policy,
most types of trademark-based domain-name disputes must be resolved by agreement, court
action, or arbitration before a registrar will cancel, suspend, or transfer a domain name.
Disputes alleged to arise from abusive registrations of domain names (for example,
cybersquatting) may be addressed by expedited administrative proceedings that the holder
of trademark rights initiates by filing a complaint with an approved dispute-resolution
service provider.
To
invoke the policy, a trademark owner should either (a) file a complaint in a court of
proper jurisdiction against the domain-name holder (or where appropriate an in-rem action
concerning the domain name) or (b) in cases of abusive registration submit a complaint to
an approved dispute-resolution service provider. . ."
<http://www.icann.org/udrp/udrp.htm> (October 20, 2000) .
11 The procedural history discussed
here does riot affect the Court's reasoning in this case.