The Christensen Firm v. Chameleon Data Corp., 83 U.S.P.Q. 2d (BNA) 1856 (W.D. Wash. 2006) (full-text).
Factual Background Edit
Plaintiff law firm hired defendant in 1995 to provide email hosting and web services. In 2005, plaintiff transferred management of its "cc-lawfirm.com" domain name to defendant, who had also registered the domain names "christensenfirm.com," "thechristensenfirm.com," and "thechristensenfirm.net" on behalf of plaintiff. In 2006, plaintiff disputed certain charges on defendant's invoices. Defendant transferred ownership of plaintiff's four domain names to itself to gain "leverage" in this dispute, advising plaintiff that it would return the domain names when the disputed invoices were paid in full.
Trial Court Proceedings Edit
Plaintiff's e-mail services were shut down on March 1, 2006. Several days later plaintiff filed suit in state court. Before the action was removed to federal court, the state court issued a TRO restoring plaintiff's e-mail services and ordering transfer of the domain names back to plaintiff. In this decision, the court denied defendant's motion for partial summary judgment that, as a matter of law under the ACPA , it (1) did not have a bad-faith intent to profit from the domain names, and (2) did not register, traffic in, or use the domain names.
Though defendant's CEO conceded that his company transferred the domain names to "assist in the collection of amounts . . . owed by [plaintiff]," defendant nonetheless argued that its actions were substantially different from those traditionally labeled "cybersquatters." Regarding bad faith, the court focused on defendant's transfer of the domain names to itself to gain leverage against its clients. Defendant argued that it did not transfer the domain names in bad faith or for a profit but simply sought to "secure payment for services already performed."
The court cited multiple cases holding that "an extortionate offer to sell" or an offer to transfer a domain name to obtain a benefit in "commercial dispute negotiations" were examples of bad-faith and an intent to profit, respectively, which created a genuine issue of fact on whether defendant had a bad-faith intent to profit. According to the court, the critical question was "whether a defendant seeks a gain in exchange for the transfer of the disputed domain name."
The court also rejected defendant's argument that the ACPA did not apply here because it did not "register, traffic in, or use" the disputed domain names. Defendant argued that it "merely changed the name of the account owner" and did not actually "register" them. The court, however, noted that prior to defendant's actions the domain names were registered to plaintiff and that after defendant's actions the domain names were registered to defendant. Moreover, defendant undermined its non-ownership argument when it instructed the registrar of the names to deny plaintiff its rights to the domain names. Accordingly, the court concluded, as a matter of law, that defendant's transfer of the disputed domain names to itself constituted "registration" under the ACPA and denied defendant's motion on this issue.
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