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Application of the Anticybersquatting Consumer Protection Act and Retroactivity:

Sporty's Farm L.L.C. v. Sportsman's Market, Inc.,       F.3d       (2nd Cir. 2000)

• This case was initiated in the district court as a claim under the Federal Trademark Dilution Act but, while its appeal was pending, the Anticybersquatting Consumer Protection Act was passed.
• The plaintiff, Sportsman's, was a mail order catalog company which specialized in aviation and aviation-related products, with the relatively recent offering of tools and home accessories.
  • It began use of a registered "sporty" logo in the 1960's, used the registered word mark "Sporty's" on all of its mail order catalogs and incorporated the word "sportys" into two of its toll free numbers.
• The defendant, Omega, was also a mail order catalog company which sold scientific process measurement and control instruments.
  • The defendant sought to enter the aviation products catalog business in late 1994 and early 1995, forming a subsidiary called "Pilot's Depot" for that purpose.
    • It was after this that Omega registered the domain name "sportys.com".
  • In January 1996 the defendant formed another subsidiary which subsequently used the sportys.com site to advertise its Christmas tree sales business.
  • After Sportsman's discovered the defendant's domain name use in March 1996, the Christmas tree retailer "Sporty's" initiated an action seeking declaratory relief regarding its right to use the sportys.com domain.
    • Sportsman's counterclaimed and brought in Omega as a third-party defendant in its infringement, anti-dilution and state unfair competition law claims.
• The district court found for the defendant on the infringement claim, but for the plaintiff on the anti-dilution claim.
  • Injunctive relief only was awarded because the lower court felt that the defendant's conduct could not have been willful, given the uncertain state of the law at the time of the events in question.
  • Because of this consideration and the fact that cybersquatters were devising more and more elaborate ways of avoiding liability for dilution, the Anticybersquatting Consumer Protection Act ("ACPA") was passed while this appeal was pending.
• The appeals court applied the ACPA to the district court's fact findings in this case.
  • The general rule requiring the application of the law which exists at the time of the appeal and the passage of the ACPA to deal with factual scenarios like the one in issue were the court's bases for doing so.
  • The application of the ACPA was not seen as retroactive because it avoided only continuing harm to the plaintiff and resulted in only prospective relief.

• The elements of an ACPA claim are:
  
  
  1. Bad faith intent of a party to profit from a mark;
  2. The mark is either distinctive or famous; and
  3. The party with bad faith intent registers, traffics in or uses a domain name identical or confusingly similar to (or, for a famous mark, dilutive of) that mark.
  • Monetary damages for ACPA violations are generally available under §1117, but not for violations occurring prior to its enactment.
  • Injunctive relief ordering cancellation of registration, forfeiture or transfer of the domain name are the remedies available without respect to the date of the violation.
• The plaintiff's "Sporty's" registration had become incontestable and, thus, was presumptively distinctive.
  • Because domain names could not contain apostrophes, "sportys.com" was found to be as close to "Sporty's" as possible for a domain name and, thus, confusingly similar to it.
  
  
• In finding that the defendant had bad faith intent as a matter of law, the Court of Appeals considered the following factors:
  
  
  • That the defendant had no intellectual property rights in "Sporty's" at the time of the domain name registration.
  • The domain name was not the legal name of the party who registered it.
  • The domain name was not used in connection with bona fide offering of goods or services.
    • No corresponding site was put into use until after litigation had begun.
  • The use of the domain was not noncommercial or "fair use".
  • The defendant's primary purpose in registering the domain name appeared to be the preclusion of the plaintiff's use, so that the defendant's entry into the aviation products market might be easier.

• Since damages were not available under the ACPA because the violation occurred prior to its enactment, the appeals court upheld the trial court's award of injunctive relief in the form of an order to transfer the domain name to the plaintiff.
  • Because the applicable legal standard was not clearly established prior to the enactment of the ACPA, the appeals court upheld the district court's finding that the defendant did not act willfully under the Federal Trademark Dilution Act.
    • As a result, no monetary damages were available to the plaintiff.