U.S. Court of Appeals for the Eleventh Circuit, August 3, 2018, Direct Niche, LLC v. Via Varejo S/A

Domain name: Prior use in commerce: Common law mark: E-commerce: Internet law: Trademark: Uniform Dispute Resolution Policy: OMPI (UDRP): Anticybersquatting: ACPA: Consumer law:

Appellant Direct Niche, LLC initiated this case against Appellee Via Varejo S/A under the Anticybersquatting Consumer Protection Act (ACPA), 15 U.S.C. § 1114(2)(D)(v), seeking to obtain a declaratory judgment that its registration and use of the domain name casasbahia.com is not unlawful under the ACPA. Via Varejo maintained that Direct Niche is not entitled to the requested relief because Direct Niche registered the casasbahia.com domain with a bad faith intent to profit from Via Varejo’s common law service mark, Casas Bahia.

After a four-day bench trial, the United States District Court for the Southern District of Florida agreed with Via Varejo and entered judgment accordingly. On appeal, Direct Niche challenges only the district court’s finding that Via Varejo has used the Casas Bahia mark in commerce in a manner sufficient to establish ownership rights. After careful review of the record and briefs of the parties, and with the benefit of oral argument, we affirm.

Via Varejo is a Brazilian corporation with its principal place of business in São Paolo, Brazil. Via Varejo is the parent company of the Casas Bahia chain of retail stores. Casas Bahia is a multi-billion dollar retail brand with around 22,000 employees and over 750 stores throughout Brazil. Via Varejo owns a trademark portfolio for its Casas Bahia mark, including about forty trademarks in countries around the world. At the time of the bench trial, Via Varejo had pending applications for three Casas Bahia service marks in the United States. Via Varejo uses the Casas Bahia name to sell electronics, furniture, appliances, and other consumer goods. In addition to brick-and-mortar stores, Via Varejo has utilized the Casas Bahia brand in e-commerce since 2009, operating under the domain name casasbahia.com.br (the Casas Bahia Website).

Via Varejo does not operate any physical Casas Bahia stores in the United States and does not ship goods ordered online to the United States, although millions of Internet Protocol (IP) addresses located in the United States access the Casas Bahia Website every year.

In addition to the sale of products to consumers, Via Varejo also generates income from the Casas Bahia Website through the sale of advertising space to third-parties, including U.S. companies. Via Varejo does this in three ways: (1) preferred product placement, (2) a banner advertising program, and (3) its marketplace seller program.

Direct Niche is a limited liability company in Minnesota whose sole business is the acquisition of Internet domain names. At the time of trial, Direct Niche’s portfolio contained over 150 domain names, purchased through online auctions and sales, or through direct registration on websites like GoDaddy.com. Direct Niche monetizes the domain names it owns through resale, or by “parking” advertisements on the domain. “Parking” is an arrangement in which the domain name owner provides a third-party company with the exclusive right to “park” pay-per-click or other revenue-generating advertisements under the domain name. The “parking” company then pays Direct Niche a portion of the profits it generates from the advertisements. In this way, Direct Niche capitalizes on the web traffic to a particular domain. Any traffic to these domain names stems from the prior use of the domain name by a different owner, which often is, or was, a real business.

On June 15, 2015, Direct Niche registered the domain name casasbahia.com (the Domain) after purchasing it in an online auction. Direct Niche paid $22,850 for the Domain, the most it had ever paid for a domain name, and twenty times what it pays on average for a domain name. Direct Niche uses the Domain to generate revenue through the parking of advertisements. Traffic to the Domain occurs when individuals manually type casasbahia.com into their web browsers and are directed to the Domain where the parked advertisements appear.

In July 2015, Via Varejo filed a complaint under the Uniform Dispute Resolution Policy (UDRP) challenging Direct Niche’s registration of the Domain. A panelist with the World Intellectual Property Organization (WIPO) issued an Administrative Panel Decision on October 17, 2015, ordering that the Domain be transferred to Via Varejo. As a result, Direct Niche filed this lawsuit on November 5, 2015, seeking a declaration that its registration or use of the Domain was not unlawful under the ACPA, and requesting an injunction against the transfer of the Domain. See 15 U.S.C. § 1114(2)(D)(v).

This section of the ACPA provides a remedy to aggrieved domain name registrants against “‘overreaching trademark owners.’” See Barcelona.com, Inc. v. Excelentisimo Ayuntamiento de Barcelona, 330 F.3d 617, 625 (4th Cir. 2003) (quoting S. Rep. No. 106-140, at 11). Specifically, this provision states:

A domain name registrant whose domain name has been suspended, disabled, or transferred under a policy [such as the UDRP] may, upon notice to the mark owner, file a civil action to establish that the registration or use of the domain name by such registrant is not unlawful under this chapter. The court may grant injunctive relief to the domain name registrant, including the reactivation of the domain name or transfer of the domain name to the domain name registrant.

15 U.S.C. § 1114(2)(D)(v).

Via Varejo maintains that Direct Niche is not entitled to the relief it seeks because its registration and use of the Domain did violate the ACPA, specifically, 15 U.S.C. § 1125(d)(1)(A). Under this provision, a person is liable to the owner of a mark if he registers or uses a domain name that is identical or confusingly similar to the mark with a bad faith intent to profit from the use. See 15 U.S.C. § 1125(d)(1)(A).

Specifically, the district court found that Via Varejo had appropriated ownership rights to the Casas Bahia mark in the United States because it used the mark in commerce to provide advertising services for others. The court further determined that the Casas Bahia mark is inherently distinctive; the Domain is identical or at least confusingly similar to the Casas Bahia mark; Direct Niche registered the domain with the bad faith intent to profit; and Direct Niche is not entitled to the statutory safe harbor defense. Based on these findings, the district court entered final judgment in favor of Via Varejo.

The issue on appeal is whether Via Varejo owns the Casas Bahia service mark in the United States. Appropriation of service mark ownership rights under common law requires “‘actual prior use in commerce.’” See Planetary Motion, Inc. v. Techsplosion, Inc., 261 F.3d 1188, 1193 (11th Cir. 2001) (quoting Tally-Ho, Inc. v. Coast Cmty. Coll. Dist., 889 F.2d 1018, 1022 (11th Cir. 1989)).

Planetary Motion, Inc., 261 F.3d at 1194-95 & n.8. To determine whether a party has proved “use in commerce” sufficient to establish ownership, this Court has consistently applied the two-part test set forth in Planetary Motion:

“Evidence showing, first, adoption, and, second, use in a way sufficiently public to identify or distinguish the marked goods in an appropriate segment of the public mind as those of the adopter of the mark, is competent to establish ownership, even without evidence of actual sales.”

(…) “The typical evidence of use in commerce is the sale of goods bearing the mark,” however, “in the absence of actual sales, advertising, publicity, and solicitation can sufficiently meet the public identification prong of the test.”

(U.S. Court of Appeals for the Eleventh Circuit, August 3, 2018, Direct Niche, LLC v. Via Varejo S/A, Docket 17-13937, District Judge Howard, sitting by designation, published)

  

Procédure à suivre en cas de contestation de l’enregistrement par un tiers d’un nom de domaine. En l’espèce, la requérante est établie au Brésil et non aux U.S., où elle ne déploie que des activités de type E-commerce. Sa marque étrangère n’est pas enregistrée comme nom de domaine aux U.S., ni en tant que marque. L’intimée en profite et enregistre aux U.S. ce nom de domaine pour son propre compte, générant du trafic Internet lucratif. La requérante saisit l’OMPI selon l’UDRP. L’OMPI ordonne le transfert du nom de domaine à la requérante. L’intimée ouvre alors action devant l’U.S. District Court (action en constatation, requête de prononcé d’une injonction), puis saisit l’U.S. Court of Appeals. L’intimée soutient que la requérante abuse de sa marque, comportement que prohibe l’ACPA, qui peut permettre de revendiquer l’attribution d’un nom de domaine nonobstant la marque propriété d’autrui. La requérante invoque pour sa part 15 U.S.C. § 1125(d)(1)(A) de l’ACPA, disposition selon laquelle celui qui enregistre ou utilise un nom de domaine identique ou similaire à une marque d’autrui, avec l’intention de mauvaise foi de profiter de l’usage du nom de domaine, engage sa responsabilité envers le titulaire de la marque.

In casu, la requérante n’avait donc pas enregistré le nom de domaine (ni la marque), mais l’usage de ce nom et de la marque dans le commerce U.S. était suffisant pour lui conférer un droit exclusif. L’usage dans le commerce aux U.S. consistait à fournir des services publicitaires pour autrui (des tiers domiciliés aux U.S. pouvaient placer de la publicité sur le site Internet de la requérante). L’usage est suffisant s’il peut être prouvé qu’il est suffisamment public pour identifier ou distinguer les produits dans un segment approprié de la collectivité publique. L’existence ou l’absence de ventes n’est pas déterminante. En l’absence de ventes, la publicité et les sollicitations peuvent suffire.

Le jugement est en faveur de la requérante.