The Southern Company v. Dauben Inc

324 F. App'x 309
CourtCourt of Appeals for the Fifth Circuit
DecidedApril 15, 2009
Docket08-10248
StatusUnpublished
Cited by7 cases

This text of 324 F. App'x 309 (The Southern Company v. Dauben Inc) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
The Southern Company v. Dauben Inc, 324 F. App'x 309 (5th Cir. 2009).

Opinion

PER CURIAM: *

Defendant-Appellant Dauben Inc. appeals the district court’s entry of a preliminary injunction barring the company from, among other things, “[rjegistering, transferring, trafficking, using, or maintaining” the domain names sotherneompany.com and southerncopany.com. Plaintiff-Appel-lee The Southern Company, which holds federal and state trademarks for “SOUTHERN COMPANY” and the domain name southerncompany.com, instituted this action against Dauben Inc. under the Anticybersquatting Consumer Protection Act (“ACPA”), 15 U.S.C. § 1125(d). At the outset of the proceedings, Southern Company filed a motion for a preliminary injunction, which the district court granted in an October 22, 2007 order. Dauben Inc. now challenges the district court’s findings that (1) Southern Company was likely to succeed on the merits because Dauben Inc. registered the domain names with a bad faith intent to profit and (2) there existed a substantial threat that Southern Company would suffer irreparable injury without the preliminary injunction. Because the district court conducted an incomplete analy *311 sis in its findings of a likelihood of success on the merits and a substantial threat of irreparable injury, we conclude that the district court abused its discretion in granting the preliminary injunction.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Factual Background

The Southern Company (“Southern”) is a Fortune 500 company that provides energy-related services to consumers throughout the southern United States. It holds the federal, incontestable 1 mark “SOUTHERN COMPANY” and is the registrant of the domain name southern-company.com.

Dauben Inc. (“Dauben”), a Texas corporation, is the listed registrant of nearly 635,000 domain names. The two challenged domain names, sotherneompa-ny.com and southerncopany.com, are linked to a website that only provides pay-per-click advertising — when an Internet user enters either domain name in her browser, she is directed to a webpage that lists links to the websites of paying advertisers. If the user clicks on any of these links, then the advertiser pays a fee to the website. See NetQuote, Inc. v. Byrd, No. 07-CV-00630-DME-MEH, 2008 WL 2552871, at *13 (D.Colo. June 17, 2008) (quoting the defendant’s description of pay-per-click advertising “whereby ‘the advertiser pays each time an internet user “clicks” on the advertiser’s ad and is taken to a page on the advertiser’s website’ ”). The advertising links are related to, among other things, real estate and employment companies in the southern United States. The only connection between this webpage and Southern is that the webpage contains an advertisement link to Georgia Power, a Southern subsidiary.

B. Procedural Background

When Southern learned of Dauben’s use of the two contested domain names, it filed an action under the Uniform Domain Name Dispute Resolution Policy (the “UDRP”) with a World Intellectual Property Organization (the “WIPO”) arbitration panel on May 25, 2007. On August 24, 2007, the WIPO panel ruled in favor of Southern and ordered Dauben to transfer the domain names to Southern. See Southern Co. v. Tex. Int’l Prop. Assocs., Case No. D2007-0773 (WIPO Aug. 24, 2007), http://www.wipo.int/amc/en/domains/ decisions/html/2007/d2007-0773.html. Before the WIPO panel directed Dauben to transfer the domain names, however, Dau-ben filed suit against Southern in a Dallas County justice of the peace court on July 23, 2007. Doing so prevented the transfer of the domain names because the UDRP’s terms provide that if a lawsuit has been commenced concerning the arbitrated domain names, then such a transfer will not be completed until that suit has been resolved. See Internet Corp. for Assigned Names and Numbers, UDRP ¶ 4(k) (Oct. 24, 1999), http://www.icann.org/en/udrp/ udrp-policy-24oct99.htm. In the state court action, a jury returned a verdict in favor of Dauben on October 30, 2007.

Before the state court jury returned its verdict, Southern filed the current claim in the United States District Court for the Northern District of Texas on October 5, *312 2007, alleging that Dauben’s “typosquat-ting” 2 violates ACPA. Simultaneously, Southern filed a motion for preliminary injunction seeking to prevent Dauben’s continued use of the domain names. Over Dauben’s objections, 3 the district court granted the motion in an October 22, 2007 order by concluding that all four preliminary injunction prerequisites existed and therefore enjoined Dauben from “[rjegis-tering, transferring, trafficking, using, or maintaining the registration of the domain names, SOTHERNCOMPANY.COM and SOUTHERNCOPANY.COM, or any other domain name that is identical or confusingly similar to any of Plaintiffs SOUTHERN COMPANY marks.” (Order Granting Prelim. Inj. 7.)

In response, Dauben filed a motion for reconsideration. In it, Dauben argued that its employment of the domain names constituted a fair use by pointing to ACPA’s safe harbor provision, which states: “Bad faith intent ... shall not be found in any case in which the court determines that the person believed and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful.” 15 U.S.C. § 1125(d)(1)(B)(ii). According to Dauben, its use fell within this safe harbor because it employed the words “southern” and “company” in their descriptive sense by providing pay-per-click links to companies located in the South, a use allegedly comparable to a yellow pages phone book. Second, Dauben averred that the district court failed to consider the nine factors listed in 15 U.S.C. § 1125(d)(1)(B)(i) to determine whether Dauben possessed a bad faith intent to profit from the domain names and instead improperly relied on the WIPO arbitration panel’s reasoning. And third, Dauben asserted that the district court incorrectly presumed the existence of a threat of irreparable injury based on its finding a likelihood of confusion, which in turn was impermissibly based on the court’s finding the domain names confusingly similar to Southern’s mark. For Southern’s part, it countered that Dauben is not making fair use of common or descriptive words because the misspelled “sothern” and “copany” are not actual words. Southern further claimed that a majority of 15 U.S.C. § 1125(d)(1)(B)(i)’s factors support a finding of bad faith. Finally, Southern did not address Dauben’s assertion that the district court incorrectly determined that a substantial threat of irreparable injury exists.

In denying Dauben’s motion for reconsideration on February 14, 2008, the district court rebuffed all of Dauben’s arguments.

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324 F. App'x 309, Counsel Stack Legal Research, https://law.counselstack.com/opinion/the-southern-company-v-dauben-inc-ca5-2009.