Goldstein v. Gordon, 2002 WL 324289, 2002 U.S. Dist. LEXIS 3348 (N.D. Tex. Feb. 27, 2002).
Factual Background Edit
Defendant registered the domain name "cheaters.com" with Network Solutions. Plaintiff sued defendant for unfair competition under the Lanham Act, alleging that defendant had "illegal ownership" and was "illegally" using the domain "cheaters.com."
Trial Court Proceedings Edit
The court issued a summons to defendant at an address in Canada, but it was never served. Plaintiff then filed an amended complaint to add "cheaters.com" as a defendant and to proceed in rem against the domain name under the ACPA. Plaintiff stated in his amended complaint that he had not been able to locate defendant despite an "exhaustive and diligent search," so that the court lacked personal jurisdiction over defendant.
The court issued a summons to defendant "cheaters.com" in care of Network Solutions, but it was never served. Plaintiff next filed a "Consent Motion to Deposit Registrar Certificate into the Registry of the Court," which was signed only by plaintiff, but plaintiff represented that "the parties" were seeking to deposit control of the domain name with the court. Plaintiff submitted with its motion a Registrar Certificate listing a California address for defendant Gordon. The court granted plaintiff's subsequent motions for rulings that there was no personal jurisdiction over defendant Gordon and that service of process was proper as to defendant "cheaters.com," and for a default judgment against defendant "cheaters.com," which would enable the plaintiff to transfer ownership of the domain to plaintiff.
Nine months later, defendant "cheaters.com" moved to set aside the default judgment, because the court lacked in rem jurisdiction over defendant "cheaters.com." And defendant Gordon, in his capacity as registrant of "cheaters.com," sought to have the action dismissed against himself and "cheaters.com" for lack of both personal and in rem jurisdiction.
Finding for defendants, the court set aside and vacated the default judgment and granted defendants' 12(b)(6) motion to dismiss all claims against defendant "cheaters.com" for lack of personal jurisdiction. The court did not have in rem jurisdiction over the domain name, because defendant Gordon was subject to in personam jurisdiction in California. Moreover, defendants' failure to respond to the lawsuit was excusable because plaintiff had not served either defendant.
The court rejected plaintiff's contention that setting aside the default judgment would prejudice him because he had been using the domain name "cheaters.com" to market his television show for some time, because it believed that plaintiff acted in bad faith in seeking the default judgment. There was no evidence that plaintiff tried to serve defendants at the California address listed with Network Solutions, nor did plaintiff make any real attempt by e-mail or U.S. mail to encourage defendants to respond to the lawsuit.
Finally, the court granted defendants' motion for sanctions against plaintiff under Rule 11, holding that plaintiff's "tortured reading of the law" and "blatant representations" in its "Consent Motion" allowed plaintiff to manipulate the judicial system to gain control over a domain name without fully litigating the merits of the case. The court thus ordered plaintiff to pay defendant for all attorney's fees and costs.
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