Caesars World, Inc. v. Caesars-Palace.com, 112 F.Supp.2d 502, 54 U.S.P.Q.2d (BNA) 1121 (E.D. Va. 2000) (full-text) (defendant's motion to dismiss); 112 F.Supp.2d 505 (E.D. Va. 2000) (full-text) (plaintiff's contempt motion).
Factual Background Edit
Plaintiff sued numerous different parties that owned domain names, including plaintiff's CAESARS trademark or a variation thereof. After the ACPA was enacted, plaintiff amended its complaint to invoke the in rem jurisdiction provisions of the ACPA. Two of the defendants moved to dismiss plaintiff's in rem jurisdiction claim, arguing that (1) the in rem provisions of the ACPA violated due process and were thus unconstitutional, and (2) even if the in rem provisions were constitutional, plaintiff failed to meet the procedural requirements because it did not first file an action against a person and attempt personal service, it did not seek permission from the court to file in rem, and it did not first establish that the domain name violated its rights before filing an in rem case.
Trial Court Proceedings Edit
Rejecting defendant's constitutionality arguments, the court distinguished this case from the Supreme Court's decision in Shaffer v. Heitner, 433 U.S. 186 (1977). The court interpreted Shaffer as not requiring sufficient minimum contacts for personal jurisdiction in all in rem actions, but rather only "in those in rem actions where the underlying cause of action is unrelated to the property which is located in the forum state."
Because the potentially infringing domain names were directly related to the cause of action, due process did not require the minimum contacts to meet personal-jurisdiction standards. In further support of the ACPA's constitutionality, the court noted that the relief (forfeiting or canceling a domain name) was very limited in nature and did not violate due process as to defendants personally.
Also, the court held that a domain name, although not tangible, could constitute property for purposes of in rem jurisdiction. Finally, the court rejected defendant's procedural arguments, holding that (1) attempting to first obtain personal jurisdiction is not a prerequisite to in rem jurisdiction under the ACPA; (2) plaintiff was not required to seek permission from the court to file an in rem action; and (3) plaintiff was not required to first prove its case on the merits before filing an in rem case, as this would "stand the [ ACPA ] on its head."
In August 2000, in a case of first impression, the court held that a defendant domain name "claimant" is subject to discovery after the claimant files an answer, as a regular party would be subject to discovery in a non-in rem proceeding. In refusing to respond to plaintiff's discovery requests, defendant's counsel argued that plaintiff had to use third-party discovery devices if it wished to obtain discovery from the "sponsor of the litigation," such as the domain-name registrant. Because the ACPA did not address discovery matters such as this, the court looked to traditional in rem jurisprudence in admiralty cases to decide the issue.
According to the court, persons or entities filing an answer in an in rem action under the ACPA "have reciprocal duties to engage in discovery, just as the claimant in an in rem admiralty action must file an answer and respond to any interrogatories served with the complaint within twenty days of filing a claim" pursuant to Fed. R. Civ. P. C(6). Finally, defendant's counsel did not want to subject the "sponsors of the litigation" to in personam jurisdiction by responding to the discovery requests. This concern was not valid, however, based on the court's recent decision in Harrods, which held that in personam jurisdiction cannot be based solely on an appearance in an in rem action.
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