1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Facebook Incorporated, et al., No. CV-20-00470-PHX-GMS
10 Plaintiffs, ORDER
11 v.
12 Namecheap Incorporated, et al.,
13 Defendants. 14 15 Pending before the Court is Defendant WhoisGuard, Inc.’s (“WhoisGuard”) Motion 16 to Dismiss for Lack of Personal Jurisdiction and for Failure to State a Claim (Doc. 31) and 17 Defendant Namecheap, Inc.’s (“Namecheap”) (collectively, “Defendants”) Motion to 18 Dismiss for Failure to State a Claim (Doc. 30). For the following reasons, WhoisGuard’s 19 Motion is denied, Namecheap’s Motion is granted, and Plaintiffs shall have leave to amend 20 their Complaint as to Defendant Namecheap. 21 BACKGROUND 22 This case arises out of Defendants’ alleged registration, trafficking, and use of 23 domain names that encroach on the exclusive marks of Facebook, Inc., Instagram, LLC 24 and WhatsApp, Inc. (collectively, “Plaintiffs”). Defendant Namecheap is an Internet 25 Corporation of Assigned Names and Numbers (“ICANN”) accredited domain registrar. 26 (Doc. 1 ¶ 51.) In offering its customers domain name registry services, Namecheap allows 27 its customers to opt into Defendant WhoisGuard’s proxy service. Id. ¶ 52. In its proxy 28 service, WhoisGuard registers Namecheap’s customers’ domain names in WhoisGuard’s 1 name and licenses the domain names back to the customers. Id. As the domain name 2 registrant, WhoisGuard’s name, not the name of the customer, is listed in the WHOIS 3 record, a directory that contains the identity and contact information for domain names. Id. 4 ¶¶ 6, 55. 5 Several agreements relate to Namecheap’s and WhoisGuard’s services. As an 6 ICANN-accredited registrar, Namecheap is subject to ICANN’s Registrar Accreditation 7 Agreement (“RAA”). Id. ¶ 51. The RAA requires Namecheap to enter into a registration 8 agreement, which must include certain provisions, with each registered name holder. 9 (Doc. 1-5 at 16.) As relevant here, one such required provision is Section 3.7.7.3 of the 10 RAA. Id. at 16-17. Section 3.7.7.3 states:
11 Any Registered Name Holder that intends to license use of a domain name 12 to a third party is nonetheless the Registered Name Holder of record and is responsible for providing its own full contact information and for providing 13 and updating accurate technical and administrative contact information 14 adequate to facilitate timely resolution of any problems that arise in connection with the Registered Name. A Registered Name Holder licensing 15 use of a Registered Name according to this provision shall accept liability for 16 harm caused by wrongful use of the Registered Name, unless it discloses the current contact information provided by the licensee and the identity of the 17 licensee within seven (7) days to a party providing the Registered Name 18 Holder reasonable evidence of actionable harm. 19 Id. The Namecheap, Inc. Registration Agreement (“Registration Agreement”) sets forth 20 the terms for use of Namecheap’s domain name registration and related services. (Doc. 21 1-2 at 3.) Plaintiffs and Defendants dispute whether WhoisGuard agreed to the terms in 22 the Registration Agreement and whether Section 3.7.7.3, as stated above, is incorporated 23 in the Registration Agreement. In addition to the Registration Agreement, Namecheap’s 24 customers that opt into WhoisGuard’s proxy service are bound by the terms in the 25 Namecheap WHOIS Proxy Agreement (“Proxy Agreement”) and the WhoisGuard 26 Services Agreement (“WhoisGuard Agreement”). (Doc. 1 ¶ 29.) 27 Plaintiffs allege that at least forty-five domains (“Infringing Domain Names”) 28 registered by WhoisGuard are identical or confusingly similar to trademarks and service 1 marks to which they own exclusive rights. Id. ¶ 69. Between October 2018 and February 2 2020, Plaintiffs contacted WhoisGuard about the Infringing Domain Names and requested 3 that WhoisGuard disclose the licensees’ identities. Id. ¶ 83. Plaintiffs allege WhoisGuard 4 assumed liability on behalf of its licensees when it failed to disclose the identity or contact 5 information of its licensees pursuant to Section 3.7.7.3 of the RAA. Id. ¶¶ 80, 84. 6 Plaintiffs brought this action on March 4, 2020. Plaintiffs assert causes of action 7 for cybersquatting (Count 1), trademark infringement (Count 2), false designation of origin 8 (Count 3), and dilution (Count 4). Defendant Whoisguard moves to dismiss Plaintiffs’ 9 Complaint for lack of personal jurisdiction and both Defendants move to dismiss all counts 10 for failure to adequately allege sufficient facts.
11 DISCUSSION 12 I. Defendant WhoisGuard’s Motion to Dismiss for Lack of Personal 13 Jurisdiction
14 A. Legal Standard 15 “When a defendant moves to dismiss for lack of personal jurisdiction, the 16 plaintiff bears the burden of demonstrating that the court has jurisdiction over the 17 defendant.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Where, as 18 here, the motion to dismiss a complaint for lack of personal jurisdiction “is based on written 19 materials rather than an evidentiary hearing, ‘the plaintiff need only make a prima facie 20 showing of jurisdictional facts.’” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 21 797, 800 (9th Cir. 2004). 22 When determining the sufficiency of a prima facie showing, “[t]he court may 23 consider evidence presented in affidavits.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th 24 Cir. 2001). The court must assume as true all uncontroverted facts in the complaint and 25 must interpret all evidentiary disputes in the plaintiff’s favor. See Schwarzenegger, 374 26 F.3d at 800. However, “the plaintiff cannot simply rest on the bare allegations of its 27 complaint” if controverted by evidence incorporated into the defendant’s motion. Id. 28 (internal quotation omitted); see also Data Disc, Inc. v. Sys. Tech. Assocs., 557 F.2d 1280, 1 1284 (9th Cir. 1977) (explaining that a court “may not assume the truth of allegations in a 2 pleading which are contradicted by affidavit.”). All evidence must be admissible to be 3 considered. See Travelers Cas. & Sur. Co. of Am. v. Telstar Const. Co., Inc., 252 F. Supp. 4 2d 917, 923 (D. Ariz. 2003). 5 B. Personal Jurisdiction 6 A federal court sitting in diversity “applies the personal jurisdiction rules of the 7 forum state provided the exercise of jurisdiction comports with due process.” Scott v. 8 Breeland, 792 F.2d 925, 927 (9th Cir. 1986). The Arizona long arm statute is co-extensive 9 with the limits of federal due process. See Doe v. Am. Nat’l Red Cross, 112 F.3d 1048, 10 1050 (9th Cir. 1997) (citing Batton v. Tenn. Farmers Mut. Ins. Co., 153 Ariz. 268, 270, 11 736 P.2d 2, 4 (1987)); see also Ariz. R. Civ. P. 4.2(a). “Due process requires that 12 nonresident defendants have certain minimum contacts with the forum state, so that the 13 exercise of personal jurisdiction does not offend traditional notions of fair play and 14 substantial justice.” Doe, 112 F.3d at 1050 (citing Int’l Shoe Co. v. Washington, 326 U.S. 15 310, 316 (1945)). There are two types of personal jurisdiction, general and specific. 16 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n. 15 (1985). 17 The existence of a forum selection clause in this case renders personal jurisdiction 18 proper in this Court.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Facebook Incorporated, et al., No. CV-20-00470-PHX-GMS
10 Plaintiffs, ORDER
11 v.
12 Namecheap Incorporated, et al.,
13 Defendants. 14 15 Pending before the Court is Defendant WhoisGuard, Inc.’s (“WhoisGuard”) Motion 16 to Dismiss for Lack of Personal Jurisdiction and for Failure to State a Claim (Doc. 31) and 17 Defendant Namecheap, Inc.’s (“Namecheap”) (collectively, “Defendants”) Motion to 18 Dismiss for Failure to State a Claim (Doc. 30). For the following reasons, WhoisGuard’s 19 Motion is denied, Namecheap’s Motion is granted, and Plaintiffs shall have leave to amend 20 their Complaint as to Defendant Namecheap. 21 BACKGROUND 22 This case arises out of Defendants’ alleged registration, trafficking, and use of 23 domain names that encroach on the exclusive marks of Facebook, Inc., Instagram, LLC 24 and WhatsApp, Inc. (collectively, “Plaintiffs”). Defendant Namecheap is an Internet 25 Corporation of Assigned Names and Numbers (“ICANN”) accredited domain registrar. 26 (Doc. 1 ¶ 51.) In offering its customers domain name registry services, Namecheap allows 27 its customers to opt into Defendant WhoisGuard’s proxy service. Id. ¶ 52. In its proxy 28 service, WhoisGuard registers Namecheap’s customers’ domain names in WhoisGuard’s 1 name and licenses the domain names back to the customers. Id. As the domain name 2 registrant, WhoisGuard’s name, not the name of the customer, is listed in the WHOIS 3 record, a directory that contains the identity and contact information for domain names. Id. 4 ¶¶ 6, 55. 5 Several agreements relate to Namecheap’s and WhoisGuard’s services. As an 6 ICANN-accredited registrar, Namecheap is subject to ICANN’s Registrar Accreditation 7 Agreement (“RAA”). Id. ¶ 51. The RAA requires Namecheap to enter into a registration 8 agreement, which must include certain provisions, with each registered name holder. 9 (Doc. 1-5 at 16.) As relevant here, one such required provision is Section 3.7.7.3 of the 10 RAA. Id. at 16-17. Section 3.7.7.3 states:
11 Any Registered Name Holder that intends to license use of a domain name 12 to a third party is nonetheless the Registered Name Holder of record and is responsible for providing its own full contact information and for providing 13 and updating accurate technical and administrative contact information 14 adequate to facilitate timely resolution of any problems that arise in connection with the Registered Name. A Registered Name Holder licensing 15 use of a Registered Name according to this provision shall accept liability for 16 harm caused by wrongful use of the Registered Name, unless it discloses the current contact information provided by the licensee and the identity of the 17 licensee within seven (7) days to a party providing the Registered Name 18 Holder reasonable evidence of actionable harm. 19 Id. The Namecheap, Inc. Registration Agreement (“Registration Agreement”) sets forth 20 the terms for use of Namecheap’s domain name registration and related services. (Doc. 21 1-2 at 3.) Plaintiffs and Defendants dispute whether WhoisGuard agreed to the terms in 22 the Registration Agreement and whether Section 3.7.7.3, as stated above, is incorporated 23 in the Registration Agreement. In addition to the Registration Agreement, Namecheap’s 24 customers that opt into WhoisGuard’s proxy service are bound by the terms in the 25 Namecheap WHOIS Proxy Agreement (“Proxy Agreement”) and the WhoisGuard 26 Services Agreement (“WhoisGuard Agreement”). (Doc. 1 ¶ 29.) 27 Plaintiffs allege that at least forty-five domains (“Infringing Domain Names”) 28 registered by WhoisGuard are identical or confusingly similar to trademarks and service 1 marks to which they own exclusive rights. Id. ¶ 69. Between October 2018 and February 2 2020, Plaintiffs contacted WhoisGuard about the Infringing Domain Names and requested 3 that WhoisGuard disclose the licensees’ identities. Id. ¶ 83. Plaintiffs allege WhoisGuard 4 assumed liability on behalf of its licensees when it failed to disclose the identity or contact 5 information of its licensees pursuant to Section 3.7.7.3 of the RAA. Id. ¶¶ 80, 84. 6 Plaintiffs brought this action on March 4, 2020. Plaintiffs assert causes of action 7 for cybersquatting (Count 1), trademark infringement (Count 2), false designation of origin 8 (Count 3), and dilution (Count 4). Defendant Whoisguard moves to dismiss Plaintiffs’ 9 Complaint for lack of personal jurisdiction and both Defendants move to dismiss all counts 10 for failure to adequately allege sufficient facts.
11 DISCUSSION 12 I. Defendant WhoisGuard’s Motion to Dismiss for Lack of Personal 13 Jurisdiction
14 A. Legal Standard 15 “When a defendant moves to dismiss for lack of personal jurisdiction, the 16 plaintiff bears the burden of demonstrating that the court has jurisdiction over the 17 defendant.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Where, as 18 here, the motion to dismiss a complaint for lack of personal jurisdiction “is based on written 19 materials rather than an evidentiary hearing, ‘the plaintiff need only make a prima facie 20 showing of jurisdictional facts.’” Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 21 797, 800 (9th Cir. 2004). 22 When determining the sufficiency of a prima facie showing, “[t]he court may 23 consider evidence presented in affidavits.” Doe v. Unocal Corp., 248 F.3d 915, 922 (9th 24 Cir. 2001). The court must assume as true all uncontroverted facts in the complaint and 25 must interpret all evidentiary disputes in the plaintiff’s favor. See Schwarzenegger, 374 26 F.3d at 800. However, “the plaintiff cannot simply rest on the bare allegations of its 27 complaint” if controverted by evidence incorporated into the defendant’s motion. Id. 28 (internal quotation omitted); see also Data Disc, Inc. v. Sys. Tech. Assocs., 557 F.2d 1280, 1 1284 (9th Cir. 1977) (explaining that a court “may not assume the truth of allegations in a 2 pleading which are contradicted by affidavit.”). All evidence must be admissible to be 3 considered. See Travelers Cas. & Sur. Co. of Am. v. Telstar Const. Co., Inc., 252 F. Supp. 4 2d 917, 923 (D. Ariz. 2003). 5 B. Personal Jurisdiction 6 A federal court sitting in diversity “applies the personal jurisdiction rules of the 7 forum state provided the exercise of jurisdiction comports with due process.” Scott v. 8 Breeland, 792 F.2d 925, 927 (9th Cir. 1986). The Arizona long arm statute is co-extensive 9 with the limits of federal due process. See Doe v. Am. Nat’l Red Cross, 112 F.3d 1048, 10 1050 (9th Cir. 1997) (citing Batton v. Tenn. Farmers Mut. Ins. Co., 153 Ariz. 268, 270, 11 736 P.2d 2, 4 (1987)); see also Ariz. R. Civ. P. 4.2(a). “Due process requires that 12 nonresident defendants have certain minimum contacts with the forum state, so that the 13 exercise of personal jurisdiction does not offend traditional notions of fair play and 14 substantial justice.” Doe, 112 F.3d at 1050 (citing Int’l Shoe Co. v. Washington, 326 U.S. 15 310, 316 (1945)). There are two types of personal jurisdiction, general and specific. 16 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n. 15 (1985). 17 The existence of a forum selection clause in this case renders personal jurisdiction 18 proper in this Court. A contract’s forum selection clause alone is sufficient to confer 19 personal jurisdiction. Chan v. Soc’y Expeditions, Inc., 39 F.3d 1398, 1406–07 (9th Cir. 20 1994). Plaintiffs and WhoisGuard dispute whether WhoisGuard is a party to the 21 Registration Agreement, which contains an Arizona forum selection clause. 22 It is not necessary to resolve whether WhoisGuard consented to the Registration 23 Agreement, however, as WhoisGuard is bound by the Registration Agreement’s forum 24 selection clause regardless of whether it is a signatory.1 Where the alleged conduct of 25 nonparties is closely related to the contractual relationship, “a range of transaction 26 1 Whether WhoisGuard is a party to the Agreement is central to several of Plaintiffs’ claims. 27 Therefore, the averments in the affidavit related to the existence or lack of personal jurisdiction are intertwined with the merits. Deciding the jurisdictional question on 28 alternative grounds avoids weighing on the merits at this early stage. 1 participants, parties and non-parties, should benefit from and be subject to forum selection 2 clauses.” Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 n.5 (9th Cir. 1988). 3 See, e.g., Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 456 (9th Cir. 2007). 4 Here, the disputed conduct involves WhoisGuard’s provision of its proxy service to 5 Namecheap’s customers. To access WhoisGuard’s proxy service, a Namecheap customer 6 must enter into several agreements with Namecheap and WhoisGuard, including the 7 Registration Agreement. Once a Namecheap customer elects to use WhoisGuard’s proxy 8 service, WhoisGuard becomes the domain name registrant for that customer’s domain. In 9 doing so, WhoisGuard falls directly under the definition of “you” and “your” in the 10 Registration Agreement. Therefore, the disputed conduct is “closely related” to the 11 Registration Agreement. 12 Finally, the forum selection clause confers personal jurisdiction because it covers 13 the dispute at issue. The Registration Agreement selects Arizona as the forum “for the 14 adjudication of any third party disputes (i.e., disputes between you and another party, not 15 us) concerning or arising from use of domain names registered hereunder.” (Doc. 1-2 at 16 17.) As this dispute relates to WhoisGuard, who falls under the definition of “you”, and a 17 third party, Plaintiffs, regarding use of domain names registered under the Registration 18 Agreement, the forum selection clause directly covers this dispute. Accordingly, Plaintiffs’ 19 allegations are sufficient to justify the exercise of this Court’s jurisdiction over 20 WhoisGuard. 21 II. Motions to Dismiss for Failure to State a Claim 22 A. Legal Standard 23 To survive dismissal for failure to state a claim pursuant to Federal Rule of Civil 24 Procedure 12(b)(6), a complaint must contain more than a “formulaic recitation of the 25 elements of a cause of action”; it must contain factual allegations sufficient to “raise the 26 right of relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 27 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). When analyzing a complaint 28 for failure to state a claim, “allegations of material fact are taken as true and construed in 1 the light most favorable to the non-moving party.” Smith v. Jackson, 84 F.3d 1213, 1217 2 (9th Cir. 1996). However, legal conclusions couched as factual allegations are not given a 3 presumption of truthfulness, and “conclusory allegations of law and unwarranted 4 inferences are not sufficient to defeat a motion to dismiss.” Pareto v. F.D.I.C., 139 F.3d 5 696, 699 (9th Cir. 1998). 6 B. Analysis 7 In separate motions, Defendants Namecheap and WhoisGuard move to dismiss all 8 of Plaintiffs’ claims. The Court addresses each motion separately. 9 1. WhoisGuard 10 Plaintiffs argue WhoisGuard is liable on all four counts because WhoisGuard 11 accepted liability for its licensees’ wrongful use of the Infringing Domain Names when it 12 breached Section 3.7.7.3 of the RAA, as incorporated in the Registration Agreement. 13 First, Plaintiffs plausibly allege that WhoisGuard is a party to the Registration 14 Agreement. Plaintiffs allege that WhoisGuard is the WHOIS registrant for the Infringing 15 Domain Names. ICANN requires every registrant of a domain name to enter into a 16 registration agreement, and the Registration Agreement defines “you” and “your” to 17 include “the registrant listed in the WHOIS contact information for the domain.” (Doc. 18 1-2 at 3.) Drawing all reasonable inferences in favor of Plaintiffs, WhoisGuard’s inclusion 19 in the definition of the parties to the Registration Agreement makes it plausible that 20 WhoisGuard is a party to the Registration Agreement. 21 Second, Plaintiffs plausibly allege that they are third-party beneficiaries to the 22 Registration Agreement. In order to recover as a third-party beneficiary of a contract, 23 (1) an intention to benefit the third-party must be indicated in the contract, (2) the benefit 24 must be intentional and direct, and (3) it must appear the parties intended to recognize the 25 third-party as the primary party in interest. Norton v. First Fed. Sav., 128 Ariz. 176, 178, 26 624 P.2d 854, 856 (1981). Drawing all reasonable inferences in favor of Plaintiffs, Section 27 3.7.7.3’s language about third parties, as detailed previously, can be read to confer a benefit 28 on parties like Plaintiffs. See Solid Host, NL v. Namecheap, Inc., 652 F. Supp. 2d 1092, 1 1119 (C.D. Cal. 2009) (inferring an intent to benefit trademark owners in the language of 2 3.7.7.3). WhoisGuard contends that Section 3.7.7.3 does not confer a right to third parties 3 because the RAA contains a “No Third Party Beneficiary” clause. (Doc. 39 at 17.) 4 However, WhoisGuard misconstrues Plaintiffs’ argument. Plaintiffs do not argue that they 5 are trying to enforce the RAA itself, but the RAA as incorporated in the Registration 6 Agreement. 7 Finally, Plaintiffs plausibly allege that Section 3.7.7.3’s language is incorporated 8 into the Registration Agreement and that this language makes WhoisGuard liable. A 9 provision in the Registration Agreement states that by agreeing to the services provided by 10 Namecheap, “you have read and agree to be bound by . . . the rules, policies, or agreements 11 published in association with specific of the Service(s) and/or which may be enforced by 12 Internet Corporation of Assigned Names and Numbers (“ICANN”).” (Doc. 1-2 at 3.) The 13 Registration Agreement then links to a page titled “Registrant Rights, Benefits & 14 Responsibilities.” Id. That page explains that “ICANN has set forth various rights and 15 responsibilities of Registrants” and links to ICANN’s website. (Doc. 32-2 at 10.)2 On 16 ICANN’s website, ICANN explains that, in accordance with the RAA, “the 17 Registrar/Registered Name Holder Agreement must include – at minimum – the following 18 items (as stated at Sections 3.7.7.1 – 12 of the RAA).” Id. at 13. Section 3.7.7.3, as detailed 19 above, states that the registered name holder licensing use of a domain name accepts 20 liability for wrongful use unless they disclose the contact information and identity of the 21 licensee. Drawing all reasonable inferences in favor of Plaintiffs, the Registration 22 Agreement plausibly incorporates Section 3.7.7.3 and WhoisGuard plausibly made itself 23 liable pursuant to the section for the infringements of the Domain Name Licensees when it 24 failed to disclose the identity of the Infringing Domain Name licensees.
25 2 Courts may consider documents attached to a motion to dismiss without converting the motion into one for summary judgment “if the attached document is: (1) central to the 26 plaintiff’s claim; and (2) undisputed.” Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir. 2002). The links on Namecheap’s website referred to in the Registration Agreement and 27 the terms on ICANN’s website are central to whether WhoisGuard may be held liable and are not disputed by Defendants. Therefore, these terms may be properly considered in the 28 context of the instant motions. 1 WhoisGuard disagrees that it agreed to accept liability for its licensees. Defendants 2 point out that ICANN’s website, which references the RAA, puts a different interpretation 3 on Section 3.7.7.3 than Plaintiffs do. ICANN’s website describes Section 3.7.7.3 in the 4 following way:
5 Whoever is listed as the Registered Name Holder must provide full contact 6 information and is the Registered Name Holder of record. Sometimes a Registered Name Holder may register a domain name and then allow another 7 person to use the domain name (such as a website designer registering a 8 domain name for a client). If this happens, and the person actually using the name did not enter into the Registrar/Registered Name Holder Agreement 9 (referred to as a “third party” in the RAA), the Registered Name Holder could 10 be accountable for wrongful use of the domain name by the third party. This will happen if the Registered Name Holder is provided with “reasonable 11 evidence of actionable harm” from the third party’s use of the domain name. 12 In that situation the Registered Name Holder will “accept liability for harm caused by wrongful use of the Registered Name,” unless the Registered 13 Name Holder discloses the user’s identity and current contact information. 14 Id. 15 Based on this language, WhoisGuard argues it cannot be held liable for its licensees 16 because those licensees also entered into the Registration Agreement and are therefore not 17 considered third parties under Section 3.7.7.3. (Doc. 39 at 15.) It is not appropriate, on a 18 motion to dismiss, however, to determine which language governs. Plaintiffs’ 19 interpretation of Section 3.7.7.3’s language, as stated in the actual RAA, plausibly supports 20 that WhoisGuard is liable for its licensees. Significantly, the RAA agreement does not 21 define what a third party is anywhere in the agreement. As all reasonable inferences must 22 be drawn in favor of Plaintiffs at this stage, Plaintiffs’ plausible interpretation of Section 23 3.7.7.3 governs. Therefore, Plaintiffs plausibly claim that WhoisGuard is liable for its 24 licensees’ actions on all four counts. 25 2. Namecheap 26 a. Count One 27 To state a claim of cybersquatting under the Anticybersquatting Consumer 28 Protection Act (“ACPA”), the trademark owner must establish that “(1) it has a valid 1 trademark entitled to protection; (2) its mark is distinctive or famous; (3) the defendant’s 2 domain name is identical or confusingly similar to, or in the case of famous marks, dilutive 3 of, the owner’s mark; and (4) the defendant used, registered, or trafficked in the domain 4 name (5) with a bad faith intent to profit.” DaimlerChrysler v. The Net Inc., 388 F.3d 201, 5 204 (6th Cir. 2004). Namecheap argues Plaintiffs’ cybersquatting claim fails as a matter 6 of law because Plaintiffs fail to sufficiently allege two elements of a cybersquatting claim: 7 that Namecheap used, registered, or trafficked the Infringing Domain Names and that 8 Namecheap had a bad faith intent to profit. (Doc. 30.) 9 The ACPA imposes liability for “register[ing], traffic[king] in, or us[ing]” a domain 10 name that is identical to or confusingly similar to a distinctive mark. 15 U.S.C. 11 § 1125(d)(1)(A). Plaintiffs argue Namecheap “used” the Infringing Domain Names by 12 setting up revenue-generating parking pages. (Doc. 32 at 10.) However, Plaintiffs do not 13 allege Namecheap used the Infringing Domain Names to set up parking pages anywhere in 14 their Complaint. The allegations Plaintiffs cite to in their Complaint only refer to how 15 licensees used the domain names. (Doc. 1 ¶¶ 85-86.) Plaintiffs do refer to the Registration 16 Agreement, which explains how Namecheap is permitted to host parking pages, and 17 screenshots of some of the Infringing Domain Names, which shows Namecheap’s logo, 18 but neither of these references, standing alone, show Namecheap used the Infringing 19 Domain Names to set up parking pages. (Doc. 32 at 10.) As Plaintiffs fail to sufficiently 20 plead this element, the Court need not address whether Namecheap had a bad faith intent 21 to profit. 22 b. Counts Two, Three, and Four 23 Namecheap argues Plaintiffs fail on their second, third, and fourth causes of action 24 because all three counts require a showing that Namecheap used the marks in commerce. 25 To allege a claim for trademark infringement, false designation of origin, and dilution, a 26 plaintiff must allege the infringer used the plaintiff’s marks “in commerce” in connection 27 with the sale or advertising of goods or services. 15 U.S.C. §§ 1114(1)(a), 1125(a)(1). 28 Again, Plaintiffs argue Namecheap’s use of parking pages evidences use in commerce. 1 (Doc. 32 at 19.) As previously addressed, Plaintiffs do not allege Namecheap used the 2 Infringing Domain Names to set up parking pages in their Complaint. Therefore, Plaintiffs 3 fail to sufficiently plead Counts Two, Three, and Four as to Namecheap. 4 c. Alter Ego and Direct Participant Liability 5 Plaintiffs argue Namecheap is liable for WhoisGuard’s tortious conduct on all 6 counts as its alter ego and direct participant. To state a claim for alter ego liability, there 7 must be “such unity of interest and ownership” that the separate personalities of the two 8 entities fail to exist and that failure to disregard the separate identities results in “fraud or 9 injustice.” Am. Tel. & Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 591 (9th 10 Cir. 1996). The unity and ownership prong requires a showing that the entity controls the 11 other “to such a degree as to render the latter the mere instrumentality of the former.” Doe, 12 248 F.3d at 926 (quoting Calvert v. Huckins, 875 F. Supp. 674, 678 (E.D. Cal. 1995)). 13 There must be pervasive control, such as where a parent corporation “dictates “[e]very 14 facet [of the subsidiary’s] business-from broad policy decisions to routine matters of day- 15 to-day operation[.]” Id. (quoting Rollins Burdick Hunter of So. Cal., Inc. v. Alexander & 16 Alexander Servs., Inc., 253 Cal. Rptr. 338, 344 (Ct. App. 1988)). Alter ego liability is not 17 found where the two entities observe their corporate formalities or where the parent does 18 not direct the subsidiary’s routine day-to-day operations. See Ranza v. Nike, Inc., 793 F.3d 19 1059, 1073–75 (9th Cir. 2015). 20 Plaintiffs point to the following factual allegations in their Complaint to support 21 their argument that Namecheap and WhoisGuard are not separate entities: (1) WhoisGuard 22 provides its proxy service on behalf of Namecheap; (2) there is no charge for 23 WhoisGuard’s service; (3) when WhoisGuard is contacted with evidence of trademark 24 infringement, served with subpoenas seeking domain name licensee information, or 25 receives administrative domain name complaints, Namecheap responds instead of 26 WhoisGuard; (4) Namecheap owned the WhoisGuard domain name in the past; and 27 (5) Namecheap currently operates the WhoisGuard domain name and controls the content 28 available on WhoisGuard’s website. (Doc. 1 ¶¶ 59-66.) Plaintiffs also point out that 1 Namecheap confuses the role of registrar and service provider on their website, (Doc. 1-6 2 at 2), and interchanged Namecheap and WhoisGuard’s name twice in the Proxy 3 Agreement, (Doc. 1-3). 4 Other than the conclusory allegation that “WhoisGuard is not a separate autonomous 5 entity from Namecheap,” Plaintiffs do not allege anything about failure to observe 6 corporate formalities. (Doc. 1 ¶ 58.) And, despite Plaintiffs’ argument to the contrary, the 7 mere fact Namecheap provides WhoisGuard’s service to its customers for free does not 8 support the inference that WhoisGuard is undercapitalized or that the two companies 9 improperly commingle funds. (Doc. 32 at 24.) Plaintiffs do allege several facts that 10 indicate an overlap in Defendants’ operations, such as Namecheap responding on 11 WhoisGuard’s behalf and Namecheap’s control over WhoisGuard’s website. Additional 12 allegations are needed, however, to give rise to the plausible inference that Namecheap 13 dictates every facet of WhoisGuard’s business. As a result, Plaintiffs fail to adequately 14 allege a “unity of interest” sufficient to satisfy the first prong of the alter ego test. 15 Plaintiffs also do not sufficiently plead direct participant liability.3 Under direct 16 participant liability, a parent company may be held liable “for the wrongdoing of a 17 subsidiary where the parent directly participated in the subsidiary’s unlawful actions.” 18 Esmark, Inc. v. N.L.R.B., 887 F.2d 739, 756 (7th Cir. 1989). Plaintiffs do not allege 19 anywhere in their Complaint that WhoisGuard is Namecheap’s subsidiary. As Plaintiffs 20 fail to sufficiently plead direct participant and alter ego liability, Namecheap cannot be 21 held liable for WhoisGuard’s conduct. 22 d. Leave to Amend 23 If a motion to dismiss is granted, a court should “grant leave to amend even if no 24 request to amend the pleading was made, unless it determines that the pleading could not
25 3 Plaintiffs argue that Namecheap concedes direct participant liability for the purposes of its motion to dismiss because Namecheap did not argue direct participant liability in its 26 motion. (Doc. 32 at 23.) Although arguments raised for the first time in a reply brief will not be considered, arguments made in response to those set forth in the opposing party’s 27 opposition brief “are not new; they are rebuttal arguments, which are permitted in a reply brief.” Beckhum v. Hirsh, No. CV 07-8129-PCT-DGC (BPV), 2010 WL 582095, at *8 (D. 28 Ariz. Feb. 17, 2010). As Plaintiffs argue direct participant liability in their response, Namecheap may properly argue against it in its reply. 1 || possibly be cured by the allegation of other facts.” Cook, Perkiss & Liehe, Inc. v. N. Cal. 2|| Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990). As additional facts could potentially || cure Plaintiffs’ allegations, leave to amend is granted to Plaintiffs. 4 CONCLUSION 5 Defendant WhoisGuard’s Motion to Dismiss Plaintiffs’ claims for Lack of Personal 6|| Jurisdiction and for Failure to State a Claim are denied. Defendant Namecheap’s Motion 7 || to Dismiss all of Plaintiffs’ claims is granted. Plaintiffs shall have leave to file an Amended 8 || Complaint as to Defendant Namecheap within thirty days of the date of this Order. 9|| Accordingly, 10 IT IS HEREBY ORDERED that Defendant WhoisGuard’s Motion to Dismiss |) (Doc. 31) is DENIED. 12 IT IS FURTEHR ORDERED that Defendant Namecheap’s Motion to Dismiss (Doc. 30) is GRANTED. 14 IT IS FURTHER ORDERED granting Plaintiffs leave to amend their Complaint 15 || as to Defendant Namecheap within thirty days of the date of this Order. 16 IT IS FURTHER ORDERED that should Plaintiffs fail to file an Amended || Complaint within thirty days of the date of this Order, the Clerk of Court is directed to 18 || dismiss Plaintiffs’ claims of cybersquatting, trademark infringement, false designation of || origin, and dilution as to Defendant Namecheap without prejudice. 20 Dated this 10th day of November, 2020. 21 - 22 A Whacrsay Fotos 3 Chief United States District Judge 24 25 26 27 28
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