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The Merits of Moving a Business Or Domain Name Portfolio Outside of the United States

Some courts have declined to exercise in rem jurisdiction where there is no associated registrar, registry, or other authority associated with the domain names. This is particularly important to keep in mind when making a determination about how best to enforce your intellectual property rights. There are two major methods for enforcing these rights;

One, the Anti-cybersquatting Protection Act (ACPA) enables litigation to be brought by the owner of a trademark against domain name registrants where the complainant can establish that the registrant;

(1) has a bad faith intent to profit from the mark,

(2) registers, traffics in, or uses a domain name,

(3) that is either identical or confusingly similar to a distinctive mark or is identical, confusingly similar or dilutive of a famous mark

Two, the Uniform Domain Name Dispute Resolution Policy (UDRP) has been uniformly integrated into the global market of the registration of domain names by the Internet Corporation for Assigned Names and Numbers (ICANN). Importantly, domain registrars provide little if any oversight to make sure consumer registrants are not registering domain names that would infringe upon the rights of a trademark or brand owner. However, any entity registering a domain name automatically must represent and warrant that such registration does not impinge upon the rights of any third party (brand owner). Further, the UDRP ensures that all domain registrants agree to participate in an arbitration-like proceeding should any third party assert a claim against the domain name or registrant.

Any third party asserting a claim against a domain name or registrant must prove the following in order to be successful in a UDRP proceeding;

(1) The domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights;

(2) The registrant does not have any rights or legitimate interests in the domain name; and

(3) The registrant registered the domain name and is using it in “bad faith.”

The UDRP enables suit to be filed against a domain name, registered anywhere globally, because of the mandatory opt-in to arbitration when registering a domain name. Somewhat more situational is the ability to file a successful suit under the ACPA. This is because not all courts handle jurisdiction over foreign registered domain names equally. For instance, some state jurisdictions do not authorize an exercise of jurisdiction over domains where there is no registrant, registrar, registry or other authority associated with the domain names in that state.

The state of Nevada is among those jurisdictions. The recent ACPA lawsuit filed in Nevada by Andre Agassi and his wife, Steffi Graf, serves poignantly to illustrate this point. Deborah Logan wrote in her article “Moving Offshore Jurisdiction in an Internet World Without Borders” summarizing the World Class Tennis Stars’ attempt to derail 3rd party cybersquatters who had registered domain names with the Stars’ personal names;

“No registrar, registry or other authority associated with the domain names was located in Nevada, and the court found that no in rem jurisdiction could be exercised over the domain names. It appears that plaintiffs had intended to serve the complaint on the domain name registrars in the hope that the registrars would sign Registrar Certificates to be deposited with the district court in Nevada thereby establishing jurisdiction over the domain names. However, this strategy failed.”

However, it is important to note that this Nevada decision is not representative of a national stance on jurisdiction over foreign defendants. In contraposition to Nevada, there have been several court cases in recent years have held that US courts can still claim jurisdiction over a domain name regardless of the location of the registrant or domain name registrar.

It is also important to take note that any domain name or owner of a Website that has direct contact with individuals in the US (ex: stream of commerce- sale and export of items from a foreign source into the US), will likely be susceptible to personal jurisdiction in any US state.

To muddy up the waters further, sometimes the act of moving a domain name portfolio to a non-US registrar is viewed by the courts as evidence of bad faith, which when taken into account in giving the ruling can have a very damaging effect on a domain name or Website owner’s prospects of winning a UDRP or ACPA dispute.

To summarize, a UDRP proceeding likely always available against an infringing domain name. Suit filed under the ACPA is more likely to succeed in establishing some sort of jurisdiction over the defendant if the registrant, registrar, registry, or other authority associated with the domain is located within the same judicial district as the suit was filed in. Selling items to US consumers likely submits that Website or its owner to personal jurisdiction in the US. And, be wary of moving a domain portfolio overseas so as not to give evidence of bad faith.

 

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