Ford Mtr Co v. Catalanotte

Opinion

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 2 Ford Motor Co. v. Catalanotte No. 02-1237 ELECTRONIC CITATION: 2003 FED App. 0310P (6th Cir.) File Name: 03a0310p.06 ANDERSON, Salt Lake City, Utah, for Appellee. ON BRIEF: Anthony J. DeGidio, Toledo, Ohio, for Appellant. Scott R. Ryther, Gregory D. Phillips, HOWARD, UNITED STATES COURT OF APPEALS PHILLIPS & ANDERSON, Salt Lake City, Utah, for Appellee. FOR THE SIXTH CIRCUIT _________________ _________________

FORD MOTOR COMPANY , X OPINION Plaintiff-Appellee, - _________________ - - No. 02-1237 ALGENON L. MARBLEY, District Judge. Defendant- v. - Appellant, Peter Catalanotte (“Catalanotte”), appeals the > district court’s decision awarding Plaintiff-Appellee, Ford , Motor Company (“Ford”), $5,000 in statutory damages PETER CATALANOTTE, - Defendant-Appellant. - pursuant to the Anticybersquatting Consumer Protection Act. This Court has jurisdiction over this appeal pursuant to 28 N U.S.C. § 1291 and 15 U.S.C. § 1121(a). For the following Appeal from the United States District Court reasons, we AFFIRM the district court’s award of statutory for the Eastern District of Michigan at Detroit. damages. No. 00-75260—Robert H. Cleland, District Judge. I. BACKGROUND Argued: June 18, 2003 A. Factual Background Decided and Filed: August 28, 2003 Peter J. Catalanotte registered the Internet domain name Before: BOGGS and GILMAN, Circuit Judges; FORDWORLD.COM on January 21, 1997. Catalanotte, an MARBLEY, District Judge.* employee of Ford since 1978, knew that Ford publishes a newspaper for its employees called Ford World. Catalanotte _________________ never operated an Internet website using the domain name FORDWORLD.COM. COUNSEL Ford was unaware that Catalanotte had registered the ARGUED: Anthony J. DeGidio, Toledo, Ohio, for domain name FORDWORLD.COM until October 27, 2000, Appellant. Scott R. Ryther, HOWARD, PHILLIPS & when Catalanotte sent an e-mail message to Mr. Jacques Nasser and Mr. William Clay Ford, officers of Ford. Catalanotte’s e-mail message stated: * The domain name fordworld.com will be available for The Honorable Algenon L. Marbley, United States District Judge for the Southern District of Ohio, sitting by designation. a short period of time. . . . I have been receiving offers

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from various sources including the competition. I’ve III. DISCUSSION indicated to the other interested parties that I’m extending this opportunity to you first before any In 1999, Congress passed the Anticybersquatting Consumer decisions are to be made. Protection Act (“ACPA” or the “Act”), Pub. L. No. 106-113, app. I, §§ 3001–3010, 113 Stat. 1501, 1501A-545–52 In fact, Catalanotte had not received any offers for the domain (Nov. 29, 1999), as an amendment to the Trademark Act of name FORDWORLD.COM. 1946 (the “Lanham Act”). The ACPA applies to a person who “registers, traffics in, or uses a domain name” that is In addition to registering the domain name “identical or confusingly similar to” a “distinctive” mark or FORDWORLD.COM, Catalanotte also registered and sold that is “identical or confusingly similar to or dilutive of” a the domain names AANDE.COM and MRSPAULS.COM. “famous” mark. ACPA § 3002 (codified at 15 U.S.C. Catalanotte never operated a website using either of these § 1125(d)(1)(A) (2000)). Liability under the ACPA requires domain names. Catalanotte sold the domain name a “bad faith intent to profit,” and the ACPA provides a list of AANDE.COM to the Arts & Entertainment Network, which factors that courts may consider in determining whether a owns the trademark A&E, and he sold the domain name person acts in bad faith. ACPA § 3002 (codified at 15 U.S.C. MRSPAULS.COM to Mrs. Paul’s Kitchens, Inc., which owns § 1125(d)(1)(A)–(B)). the trademark MRS. PAUL’S. The ACPA provides for injunctive relief, ACPA B. Procedural History § 3003(a)(1) (codified at 15 U.S.C. § 1116(a)), and recovery of actual damages, ACPA § 3003(a)(2) (codified at 15 U.S.C. Ford filed its Complaint in this case on November 30, § 1117(a)). Furthermore, the ACPA permits a plaintiff to 2000, in the United States District Court for the Eastern seek, subject to court approval, between $1,000 and $100,000 District of Michigan. Ford’s Complaint alleges cyberpiracy, in statutory damages per domain name in lieu of actual trademark dilution, trademark infringement, and false damages. ACPA § 3003(b) (codified at 15 U.S.C. § 1117(d)). designation of origin. Ultimately, the district court issued its The ACPA applies to “all domain names registered before, Findings of Fact and Conclusions of Law on January 10, on, or after the date of the enactment” of the ACPA, but 2002, finding Catalanotte liable under the Anticybersquatting actual and statutory damages are not “available with respect Consumer Protection Act of 1999. The district court granted to the registration, trafficking, or use of a domain name that Ford injunctive relief and $5,000 in statutory damages. [occurred] before the date of the enactment.” ACPA § 3010 (codified at 15 U.S.C. § 1117 note). II. STANDARD OF REVIEW In this case, the district court granted Ford injunctive relief In reviewing the district court’s award of statutory and $5,000 in statutory damages because Catalanotte “‘used’ damages, we will not disturb the district court’s findings of and ‘trafficked in’ the domain name FORDWORLD.COM fact unless they are clearly erroneous, but we review any within the meaning of 15 U.S.C. § 1125(d) by offering to sell issues of law de novo. Allard Enters., Inc. v. Advanced the domain name to Ford Motor Company.” Programming Res., Inc., 146 F.3d 350, 355 (6th Cir. 1998); Champions Golf Club, Inc. v. Champions Golf Club, Inc., 78 F.3d 1111, 1116 (6th Cir. 1996). No. 02-1237 Ford Motor Co. v. Catalanotte 5 6 Ford Motor Co. v. Catalanotte No. 02-1237

A. Pre-Enactment Registration domain names registered before, on, or after the date of the enactment” of the ACPA. Id. Registration, trafficking, and Catalanotte first argues that he cannot be required to pay use of a domain name are separate acts upon which liability statutory damages for the registration, trafficking in, or use of may be based. Although damages may not be awarded for the domain name FORDWORLD.COM because he registered pre-enactment registration, trafficking, or use, the fact that a the domain name before enactment of the ACPA. Ford domain name was registered before the Act’s passage does contends that although Catalanotte is not liable for damages not absolve the registrant from liability for post-enactment for the registration of the domain name, he can be held trafficking or use. In this case, the district court did not accountable in damages for trafficking in the domain name award Ford any damages for Catalanotte’s registration of the because he offered to sell the domain name on October 27, domain name FORDWORLD.COM. Instead, the district 2000, after enactment of the ACPA. court awarded damages only for Catalanotte’s trafficking in and use of the domain name after passage of the Act, when The ACPA contains the following “Effective Date” Catalanotte offered to sell the domain name to Ford. provision: Catalanotte cites several cases addressing the ACPA, but Sections 3002(a), 3003, 3004, 3005, and 3008 of this they fail to support his position that the ACPA precludes title shall apply to all domain names registered before, liability based on domain names that were registered prior to on, or after the date of the enactment of this Act, except enactment of the ACPA. In People for the Ethical Treatment that damages under subsection (a) or (d) of section 35 of of Animals v. Doughney, 263 F.3d 359, 362 (4th Cir. 2001), the Trademark Act of 1946 (15 U.S.C. 1117) [actual and the defendant registered the domain name PETA.ORG in statutory damages], as amended by section 3003 of this 1995 to host a website for “People Eating Tasty Animals,” a title, shall not be available with respect to the parody of the plaintiff’s organization. The defendant used the registration, trafficking, or use of a domain name that domain name for six months in 1995 and 1996 before moving occurs before the date of the enactment of this Act. the website to a different domain name. Id. at 363. The plaintiff in Doughney sued seeking only injunctive relief. Id. ACPA § 3010 (codified at 15 U.S.C. § 1117 note). Therefore, the court did not have an opportunity to consider Catalanotte argues that section 3010 precludes statutory whether an award of damages was appropriate, although the damages where registration, trafficking, or use of a domain court found that the ACPA applies retroactively to all domain name has occurred before enactment of the ACPA. Thus, he names registered before enactment of the ACPA. Id. at 368. claims that statutory damages cannot be awarded against him The court quoted the ACPA’s prohibition against damages for because he registered the domain name FORDWORLD.COM conduct before the Act’s enactment and noted that damages before enactment of the ACPA, even though the district court could not be awarded because the defendant’s registration and found that he trafficked in the domain name after enactment use of PETA.ORG all occurred before enactment of the of the ACPA. ACPA. Id. Catalanotte’s construction of the Effective Date provision Catalanotte also relies on Sporty’s Farm L.L.C. v. of the ACPA is contrary to the plain language of the Sportsman’s Market, Inc., 202 F.3d 489, 500 (2d Cir. 2000), provision. In fact, the first portion of the Effective Date where the court found that damages under the ACPA were provision makes clear that the ACPA “shall apply to all unavailable because the domain name at issue “was registered No. 02-1237 Ford Motor Co. v. Catalanotte 7 8 Ford Motor Co. v. Catalanotte No. 02-1237

and used . . . prior to the passage of the new law.” What domain name after the ACPA’s date of enactment, Catalanotte fails to note, however, is that the infringing party November 29, 1999, can be liable for monetary damages in Sporty’s did not use the domain name after enactment of . . . .”). the ACPA; therefore, the court had no reason to consider whether the infringer could be liable for damages for conduct We reject, therefore, Catalanotte’s argument that the ACPA after the ACPA’s enactment. In Sporty’s, a competitor of precludes an award of damages based on trafficking in a Sportsman’s Market, Inc. registered the domain name domain name that was registered before enactment of the SPORTYS.COM in 1995. Id. at 494. In 1996, the competitor ACPA, but that was trafficked in after the Act’s enactment. sold the domain name to a newly formed subsidiary, Sporty’s According to the plain language of the Act, liability may be Farm, which grows and sells Christmas trees. Id. Sporty’s based on trafficking that occurred after the Act’s enactment, Farm soon began using the domain name for a website regardless of when the domain name was registered. advertising its Christmas trees. Id. Although the ACPA was not enacted until the Sporty’s case was on appeal, the district B. Catalanotte’s Use or Trafficking in Domain Name court had issued an injunction pursuant to the Federal After November 29, 1999 Trademark Dilution Act, prohibiting Sporty’s Farm from using the domain name SPORTYS.COM. Id. Thus, Sporty’s Catalanotte argues that he did not register, traffic in, or use Farm never used or trafficked in the domain name after the domain name FORDWORLD.COM after November 29, enactment of the ACPA. Unlike in Doughney and Sporty’s, 1999, the date of the ACPA’s enactment. First, Catalanotte the district court in this case found that Catalanotte used and registered the domain name on January 21, 1997, before the trafficked in the domain name FORDWORLD.COM after Act’s enactment. Therefore, the district court did not base its enactment of the ACPA when he offered to sell the domain award of damages on Catalanotte’s registration of the domain name to Ford in October 2000. name.

In several other cases, courts have found that damages are Second, Catalanotte argues that he did not traffic in the available pursuant to the ACPA for post-enactment use or domain name FORDWORLD.COM because he intended to trafficking, although the domain name at issue was registered give the domain name to Ford as a gift. Catalanotte argues before the ACPA’s enactment. See E. & J. Gallo Winery v. that a transfer must be “for consideration” for it to be Spider Webs Ltd., 286 F.3d 270, 277 (5th Cir. 2002) actionable as “trafficking” under the ACPA. 15 U.S.C. (“[A]lthough [the defendants] registered the domain name § 1125(d)(1)(E). But Catalanotte’s contention that he before the effective date of the ACPA, because they used the intended to give Ford the domain name as a gift is domain name after this date, they can be held liable for contradictory to the district court’s finding of fact that statutory damages for this use.”); Shields v. Zuccarini, 254 Catalanotte offered the domain name to Ford for sale. The F.3d 476, 486–87 (3d Cir. 2001) (deciding that although the district court found as follows: defendant had registered the domain names at issue before enactment of the ACPA, his “continued use of the domain The substance of the email sent by [Catalanotte] to the names after November 29, 1999 subjects him to the statute’s executives of Ford clearly indicated, without attaching a proscriptions and remedies”); Virtual Works, Inc. v. price tag, that the domain name was for sale, as it Volkswagen of Am., Inc., 238 F.3d 264, 268 (4th Cir. 2001) juxtaposed the assertion that the domain name would be (“A person who unlawfully registers, traffics in, or uses a “available for a limited time,” with the assertion that No. 02-1237 Ford Motor Co. v. Catalanotte 9 10 Ford Motor Co. v. Catalanotte No. 02-1237

[Catalanotte] had already received “offers” from “various domain name FORDWORLD.COM for purposes of the sources including the competition.” ACPA when he offered to sell the domain name to Ford. This finding was not clearly erroneous. Furthermore, Finally, Catalanotte contends that he did not use the domain Catalanotte states that he does not contest the district court’s name FORDWORLD.COM after November 29, 1999, as the findings of fact. Therefore, we reject Catalanotte’s argument district court found that he never operated a website with the that his offer to Ford was an offer to give Ford the domain domain name. The district court, however, determined that name FORDWORLD.COM as a gift. Catalanotte both used and trafficked in the domain name FORDWORLD.COM when he offered to sell the name to At oral argument, counsel for Catalanotte argued that Ford on October 27, 2001. Catalanotte argues that Congress Catalanotte did not traffic in the domain name must have meant something different by the terms “traffics FORDWORLD.COM when he offered it for sale to Ford. in” and “uses” in the ACPA, 15 U.S.C. § 1125(d)(1)(A)(ii), The ACPA defines the term “traffics in” as referring to because had Congress meant the term “uses” to include “transactions that include, but are not limited to, sales, “traffics in,” it would not have included both terms in the purchases, loans, pledges, licenses, exchanges of currency, statute. Ford responds that Catalanotte’s warehousing of the and any other transfer for consideration or receipt in exchange domain name and subsequent offer to sell the name for consideration.” § 1125(d)(1)(E). Catalanotte argues that constitutes use under the Act. We need not decide on this although the definition of “traffics in” is broad, the definition appeal whether “uses” includes “traffics in” under the ACPA requires a “transaction” such as a sale or purchase, not a mere because the district court based its award of statutory damages offer for sale or purchase. He contends that such an offer is solely on Catalanotte’s offer to sell the domain name not a “transaction.” FORDWORLD.COM to Ford. Whether that offer is characterized merely as trafficking in the domain name or We conclude that, when Catalanotte registered the domain both “trafficking in” and “using” the domain name is of no name FORDWORLD.COM and later offered it for sale to consequence to the district court’s award of statutory Ford, he trafficked in the domain name for the purposes of the damages. Because we conclude that Catalanotte trafficked in ACPA. Registering a famous trademark as a domain name the domain name FORDWORLD.COM when he offered to and then offering it for sale to the trademark owner is exactly sell it to Ford, we need not consider the meaning of the term the wrong Congress intended to remedy when it passed the “uses” in 15 U.S.C. § 1125(d)(1)(A)(ii) on this appeal. ACPA. In fact, the ACPA includes offers for sale as an example of the kind of conduct that courts may consider in C. Statute of Limitations determining whether a domain name registrant acts in bad faith. § 1125(d)(1)(B)(i)(VI) (“In determining whether a Catalanotte argues that the district court should have person has a bad faith intent . . . , a court may consider . . . the dismissed Ford’s entire ACPA claim because it was barred by person’s offer to transfer, sell, or otherwise assign the domain the statute of limitations. He claims that although the name to the mark owner . . . .”); see also Virtual Works, 238 Lanham Act lacks an express statute of limitations, courts F.3d at 270 (finding that an offer to sell the domain name generally apply an analogous state statute of limitations to VW.NET to Volkswagen for a profit evidenced bad faith). federal actions. In that vein, Catalanotte urges that a three- Accordingly, we conclude that Catalanotte trafficked in the year statute of limitations applies for Lanham Act claims brought in Michigan. Ford responds that the equitable No. 02-1237 Ford Motor Co. v. Catalanotte 11 12 Ford Motor Co. v. Catalanotte No. 02-1237

doctrine of laches governs Lanham Act claims, not the Catalanotte notes that there is a “presumption of laches” Michigan statute of limitations, and therefore, because Ford that holds that “an action is barred if not brought within the filed suit just over a month after learning of Catalanotte’s period of the [analogous state] statute of limitations and is registration of FORDWORLD.COM, laches does not bar its alive if brought within the period.” Tandy Corp., 769 F.2d at ACPA action. 365. The analogous state statute of limitations in this case is three years. Herman Miller, Inc. v. Palazzetti Imports & Catalanotte registered the domain name Exports, Inc., 270 F.3d 298, 321 (6th Cir. 2001). But FORDWORLD.COM on January 21, 1997 and offered it for Catalanotte otherwise fails to address the elements of laches, sale to Ford on October 27, 2000. Ford filed its Complaint in which are of crucial importance in this case. To invoke the this case on November 30, 2000. Catalanotte argues that the equitable doctrine of laches, a party must show: “(1) lack of statute of limitations bars Ford’s ACPA claim because Ford diligence by the party against whom the defense is asserted, filed suit more than three years after Catalanotte registered the and (2) prejudice to the party asserting it.” Id. at 320. domain name FORDWORLD.COM. With respect to the first requirement, a party’s notice or Catalanotte’s argument is an attempt to apply a statute of lack of notice that its rights are being infringed is particularly limitations that is inapplicable to Lanham Act claims. relevant to determining whether that party lacked diligence in Although the Supreme Court has adopted analogous state protecting its rights. See id. at 321. In this case, Ford first statutes of limitations in the context of certain federal actions, learned of Catalanotte’s registration of FORDWORLD.COM see, e.g., Reed v. United Transp. Union, 488 U.S. 319, 334 on October 27, 2000, when Catalanotte offered to sell the (1989) (noting the “well established rule that statutes of domain name to Ford. Therefore, Ford did not lack diligence limitations for federal causes of action not supplied with their in asserting its rights because it filed a lawsuit against own limitations period will be borrowed from state law” and Catalanotte on November 30, 2000. Furthermore, with applying that rule to claim brought pursuant to the Labor- respect to the second element of laches, the district court Management Reporting and Disclosure Act of 1959); Wilson found that Catalanotte “did not reasonably rely to his v. Garcia, 471 U.S. 261, 266–67, 280 (1985) (applying detriment upon any knowing inaction on the part of [Ford] in analogous state statute of limitations to 42 U.S.C. § 1983 registering, using, or trafficking in the domain name claim), courts have not treated Lanham Act cases in the same FORDWORLD.COM.” For this reason, Catalanotte cannot manner. Instead, the “Lanham Act does not contain a statute show that he was prejudiced by Ford’s failure to assert its of limitations. In determining when a plaintiff’s suit should rights before November 30, 2000. be barred under the Act, courts have consistently used principles of laches as developed by courts of equity.” Tandy Accordingly, we conclude that Ford’s ACPA claim is not Corp. v. Malone & Hyde, Inc., 769 F.2d 362, 365 (6th Cir. barred by the equitable doctrine of laches because Ford did 1985). Unlike statutes of limitations, “laches is not . . . a not lack diligence in asserting its rights and because mere matter of time; but principally a question of the inequity Catalanotte was not prejudiced by the timing of Ford’s of permitting the claim to be enforced.” Holmberg v. lawsuit. Armbrecht, 327 U.S. 392, 396 (1946). Laches, rather than a state statute of limitations, governs claims brought to enforce an “equitable right created by Congress.” Id. at 395. No. 02-1237 Ford Motor Co. v. Catalanotte 13

IV. CONCLUSION For the foregoing reasons, we AFFIRM the district court’s award of $5,000 in statutory damages to Ford.