Hawes v. Network Solutions, Inc. ( 2003 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CHRISTOPHER J. HAWES, d/b/a CJH 
Color and Design Group,
Plaintiff-Appellant,
v.  No. 02-1182
NETWORK SOLUTIONS, INCORPORATED;
L’OREAL, a Societe Anonyme,
Defendants-Appellees.

CHRISTOPHER J. HAWES, d/b/a CJH 
Color and Design Group,
Plaintiff-Appellant,
v.  No. 02-1377
NETWORK SOLUTIONS, INCORPORATED;
L’OREAL, a Societe Anonyme,
Defendants-Appellees.

CHRISTOPHER J. HAWES, d/b/a CJH 
Color and Design Group,
Plaintiff-Appellant,
v.  No. 02-1824
NETWORK SOLUTIONS, INCORPORATED;
L’OREAL, a Societe Anonyme,
Defendants-Appellees.

2 HAWES v. NETWORK SOLUTIONS
CHRISTOPHER J. HAWES, d/b/a CJH 
Color and Design Group,
Plaintiff-Appellant,
v.  No. 02-1825
NETWORK SOLUTIONS, INCORPORATED;
L’OREAL, a Societe Anonyme,
Defendants-Appellees.

Appeals from the United States District Court
for the Eastern District of Virginia, at Alexandria.
Claude M. Hilton, Chief District Judge; Gerald Bruce Lee,
District Judge; Thomas Rawles Jones, Jr., Magistrate Judge.
(CA-01-582-A)
Argued: January 21, 2003
Decided: July 9, 2003
Before WIDENER, WILKINSON, and NIEMEYER,
Circuit Judges.
Affirmed in part, reversed in part, and remanded by published opin-
ion. Judge Niemeyer wrote the opinion, in which Judge Widener and
Judge Wilkinson joined.
COUNSEL
ARGUED: Thomas J. Frain, Bolton, Massachusetts, for Appellant.
Robert L. Sherman, PAUL, HASTINGS, JANOFSKY & WALKER,
New York, New York; Brian Albert Davis, NETWORK SOLU-
TIONS, INC., Dulles, Virginia, for Appellees. ON BRIEF: Peter
Paul Mitrano, Boston, Massachusetts, for Appellant. Philip L. Sbar-
baro, NETWORK SOLUTIONS, INC., Dulles, Virginia; Timothy B.
HAWES v. NETWORK SOLUTIONS 3
Hyland, LEFFLER & HYLAND, P.C., Fairfax, Virginia, for Appel-
lees.
OPINION
NIEMEYER, Circuit Judge:
Christopher J. Hawes, doing business as CJH Color and Design
Group ("Hawes"), commenced this action against Network Solutions,
Inc. and L’Oreal, S.A., a French corporation, under the Lanham Act
as amended by the Anticybersquatting Consumer Protection Act, for
a declaratory judgment that Network Solutions’ transfer of his domain
name to L’Oreal was "improper" and that his
registration and use of was "not unlawful."
He also seeks an injunction ordering the return of the domain name.
The district court dismissed Hawes’ complaint for lack of subject
matter jurisdiction, under Federal Rule of Civil Procedure 12(b)(1).
For reasons that differ from those given by the district court, we
affirm dismissal of Hawes’ complaint against Network Solutions. We
reverse the district court’s order dismissing Hawes’ complaint against
L’Oreal and remand that portion of the case for further proceedings.
I
In April 1999, Hawes registered the domain name with Network Solutions, Inc. in Herndon, Virginia, and,
in connection with that registration, entered into a Domain Name
Registration Agreement. Hawes alleges that he registered the domain
name to develop a forum in which to communicate with L’Oreal con-
cerning problems with its products because his efforts to communi-
cate with L’Oreal had been unsuccessful and its representatives were
unable to "properly answer [Hawes’] inquiries."
A little over a year after Hawes registered ,
L’Oreal filed suit against Hawes in a French court, alleging infringe-
ment of L’Oreal’s French trademarks. Upon learning of this French
litigation, Network Solutions transmitted a "Registrar Certificate" for
4 HAWES v. NETWORK SOLUTIONS
the domain name to counsel for L’Oreal in
Paris, tendering control and authority over the registration of the
domain name to the French court, in accordance with Network Solu-
tions’ "standard service agreement with its registrants and the dispute
policy incorporated therein." On Hawes’ failure to appear before the
French court, the court entered judgment in favor of L’Oreal and
ordered the domain name to be transferred to
L’Oreal. Hawes has challenged the French court’s jurisdiction
through appellate review. After Hawes received notice of the French
court’s order, he wrote Network Solutions a letter stating that if Net-
work Solutions transferred the domain name pursuant to its dispute
resolution policy and the ensuing French court order, then he would
file suit in a federal court in the United States to establish that his reg-
istration and use of was not unlawful. Not-
withstanding this letter, Network Solutions transferred the name to
L’Oreal on October 5, 2000.
In April 2001, Hawes commenced this action by filing a two-count
complaint against Network Solutions and L’Oreal. In Count I, Hawes
alleged that Network Solutions breached the Domain Name Registra-
tion Agreement when it transferred to the
French court. In Count II, Hawes alleged that even though L’Oreal
owned the mark "L’Oreal," Hawes’ registration and use of the
domain name was "not unlawful" under
the Lanham Act. For relief, Hawes sought a declaratory judgment
that Network Solutions’ transfer of control over the domain name
to French counsel for deposit with the
French court was "not permitted" and that his registration and use of
that domain name was "not unlawful." He also requested that the
court "reactivate the domain name . . . and/or transfer said domain
name to [Hawes]." Each of the two counts are grounded on 15 U.S.C.
§ 1114(II) (although no statutory section with that number exists).
On Network Solutions’ motion to dismiss, filed under Federal
Rules of Civil Procedure 12(b)(1) and 12(b)(6), District Judge Gerald
Lee dismissed the complaint against Network Solutions under Rule
12(b)(1) for lack of subject matter jurisdiction. On L’Oreal’s motion
to dismiss under Rule 12(b)(1), which was assigned to District Judge
Claude Hilton, Judge Hilton denied the motion without prejudice to
L’Oreal’s ability to resurrect the issue of subject matter jurisdiction
HAWES v. NETWORK SOLUTIONS 5
at the conclusion of discovery. L’Oreal filed an answer and counter-
claims for trademark infringement and trademark dilution.
After discovery proceeded for about four months, L’Oreal renewed
its motion under Rule 12(b)(1), arguing to Judge Hilton that Judge
Lee’s prior dismissal of the complaint against Network dictated dis-
missal of the complaint against L’Oreal because, if the district court
were not to dismiss the case, "we [would be] left in the terribly awk-
ward position of having this Court rule inherently on the propriety of
Network Solutions’ actions, namely the transfer of the certificate of
registration pursuant to a French court order, in the absence of Net-
work Solutions." Judge Hilton responded:
I believe that [Hawes has] the right to come in, if this
domain name has been improperly transferred, whether it
has or not is another question, but if it has been improperly
transferred, [he has] the right to come in and ask for that
domain name back. But now I find myself in a posture
where my colleague has dismissed out of the case the very
person who has to be here in order to get that accomplished.
Judge Hilton then referred the matter back to Judge Lee. A few days
later Judge Lee granted L’Oreal’s motion to dismiss under Rule
12(b)(1). Because the complaint against it had been dismissed,
L’Oreal voluntarily dismissed its counterclaims.
From the final judgment dismissing the claims against both Net-
work Solutions and L’Oreal for lack of subject matter jurisdiction,
Hawes filed this appeal.
II
In dismissing Count I of the complaint, which alleged that
Network Solutions improperly transferred the domain name
, the district court construed the claim as one
under 15 U.S.C. § 1114(2)(D)(i)(II)(bb) and then gave its reason for
dismissing it as follows:
[Hawes] never alleges that any underlying ACPA action was
in existence when [Network Solutions] allegedly transferred
6 HAWES v. NETWORK SOLUTIONS
the LOREALCOMPLAINTS.COM domain name. Without
the existence of an underlying action, [Network Solutions],
as a domain name registry, could not be in violation of 15
U.S.C. § 1114.
The district court concluded that "[t]herefore, this Court does not have
subject matter jurisdiction over [Hawes’] claim against [Network
Solutions] pursuant to federal question jurisdiction."
In dismissing Count II of the complaint, which was asserted against
L’Oreal to obtain the declaration that Hawes’ registration and use of
the domain name was "not unlawful under
Title 15, United States Code, § 1114(II) [sic]," the district court con-
cluded that it did not have subject matter jurisdiction for three rea-
sons. First, it found that there was no justiciable case or controversy,
explaining that "[a] mere desire to use a trademark in connection with
a product does not constitute a course of conduct placing a party in
a legally adversarial conflict with another party." Second, construing
Count II as a claim under 15 U.S.C. § 1114(2)(D)(v), the district court
concluded that it lacked jurisdiction to hear a claim under that section
because the domain name was transferred to
L’Oreal pursuant to an order of a French court and therefore "is
exempt from 15 U.S.C. § 1114’s jurisdictional grant because liability
under § 1114(2)(D)(v) for transfer of a domain name depends on the
implementation of a reasonable policy effecting that transfer." The
court explained, "L’Oreal’s receipt of the domain name was pursuant
to a court order, and not pursuant to the implementation of [Network
Solutions’] reasonable policy." Finally, based on its first two reasons,
the court indicated an unwillingness to exercise discretion to grant
declaratory relief based on the discretionary language of 28 U.S.C.
§ 2201.
In reaching these conclusions, the district court was required to
interpret the complaint with scant help from Hawes’ now-replaced
counsel, who based both counts of the complaint on "15 U.S.C.
§ 1114(II)," a statutory provision that does not exist. Nonetheless, the
district court’s conclusions that Count I against Network Solutions
was based on § 1114(2)(D)(i)(II)(bb) and that Count II against
L’Oreal was based on § 1114(2)(D)(v) are not only eminently reason-
able but also undoubtedly correct in light of the allegations made and
HAWES v. NETWORK SOLUTIONS 7
relief sought with respect to each count. See Fed. R. Civ. P. 8(f) ("All
pleadings shall be so construed as to do substantial justice"); Ander-
son v. Foundation for Advancement, Educ. & Employment of Am.
Indians, 155 F.3d 500, 505 (4th Cir. 1998) ("Federal ‘notice’ pleading
standards require that the complaint be read liberally in favor of the
plaintiff").
Count I, which Hawes denominated "Improper Transfer of Domain
Name," alleges that Network Solutions "has transferred, suspended, or
otherwise modified the domain name ‘LOREALCOM-
PLAINTS.COM’ contrary to Title 15 of the United States Code,
§ 1114(II) and [Hawes] is thereby entitled to injunctive relief." This
language mirrors the language of § 1114(2)(D)(i)(II)(bb), which
describes one of the three circumstances in which a domain name reg-
istrar such as Network Solutions may be subject to suit for injunctive
relief. Specifically, § 1114(2)(D)(i) provides:
(I) A domain name registrar . . . that takes any action
described under clause (ii) ["refusing to register, removing
from registration, transferring, temporarily disabling, or per-
manently canceling a domain name"] affecting a domain
name shall not be liable for monetary relief or, except as
provided in subclause (II), for injunctive relief, to any per-
son for such action, regardless of whether the domain name
is finally determined to infringe or dilute the mark.
(II) A domain name registrar . . . may be subject to injunc-
tive relief only if such registrar . . . has—
(aa) not expeditiously deposited with a court, in
which an action has been filed regarding the dispo-
sition of the domain name, documents sufficient
for the court to establish the court’s control and
authority regarding the disposition of the registra-
tion and use of the domain name;
(bb) transferred, suspended, or otherwise modi-
fied the domain name during the pendency of the
action, except upon order of the court; or
8 HAWES v. NETWORK SOLUTIONS
(cc) willfully failed to comply with any such
court order.
It is therefore apparent that Hawes brought Count I under § 1114(2)
for injunctive relief based on subpart (D)(i)(II)(bb).
Count II, which Hawes denominated an "Action under the Anticy-
bersquatting Consumer Protection Act," alleges that "the mark owner
of ‘L’Oreal’ has received notice that [Hawes] intended to file a civil
action to establish that the registration or use of . . . ‘LOREALCOM-
PLAINTS.COM’ by [Hawes] is not unlawful." In this count, Hawes
asks that this Honorable Court hold that the registration
and/or use of the domain name
"LOREALCOMPLAINTS.COM" by plaintiff is not unlaw-
ful under Title 15, United States Code, § 1114(II) and that
this Honorable Court reactivate the domain name
"LOREALCOMPLAINTS.COM" and/or transfer said
domain name to [Hawes].
This language mirrors precisely the language of § 1114(2)(D)(v),
which provides:
A domain name registrant whose domain name has been
suspended, disabled, or transferred under a policy described
under clause (ii)(II) 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.
It is therefore apparent that Hawes brought Count II under subpart
(D)(v) of § 1114(2).
Agreeing with the district court’s identification of the statutory pro-
visions on which Counts I and II rest, we now address whether the
district court properly dismissed them for lack of subject matter juris-
diction under Federal Rule of Civil Procedure 12(b)(1).
HAWES v. NETWORK SOLUTIONS 9
A
Count I, brought under 15 U.S.C. § 1114(2)(D)(i)(II)(bb) against
Network Solutions, describes one of the limited circumstances in
which a domain name registrar, who is otherwise exempt from trade-
mark liability, may be subject to suit for injunctive relief. In our
recent case of Barcelona.com, Inc. v. Excelentisimo Ayuntamiento de
Barcelona, ___ F.3d ___, No. 02-1396, 2003 WL 21259842 (4th Cir.
June 2, 2003), we reviewed the provisions of 15 U.S.C. § 1114 that
were added by Congress in 1999 through the passage of the Anticy-
bersquatting Consumer Protection Act ("ACPA"), Pub. L. No. 106-
113, § 3001 et seq., 113 Stat. 1501A-545 (codified in scattered sec-
tions of 15 U.S.C.). We explained that the ACPA, in creating trade-
mark liability for cybersquatters, also "provide[d] limited liability for
trademark infringement by registrars who participate in the adminis-
tration of the registration, transfer, and cancellation of domain names
pursuant to a ‘reasonable policy’ that is consistent with the purposes
of the trademark laws." Id. at *6. A complaint under the ACPA
against a registrar is thus a claim under the trademark laws for which
federal courts have subject matter jurisdiction under 28 U.S.C.
§ 1338. Section 1338 provides that "[t]he district courts shall have
original jurisdiction of any civil action arising under any Act of Con-
gress relating to . . . trademarks." Section 1338 was therefore suffi-
cient to confer federal question subject matter jurisdiction on the
district court. See Bell v. Hood, 327 U.S. 678, 685 (1946) (holding
that federal question jurisdiction existed because "the right of the peti-
tioners to recover under their complaint will be sustained if the Con-
stitution and laws of the United States are given one construction and
will be defeated if they are given another"); The Fair v. Kohler Die
& Specialty Co., 228 U.S. 22, 25 (1913) ("[I]f the plaintiff really
makes a substantial claim under an act of Congress there is jurisdic-
tion whether the claim ultimately be held good or bad").
For this reason, the district court erred in dismissing Count I under
Federal Rule of Civil Procedure 12(b)(1). The court, instead, should
have considered Hawes’ claims under Federal Rule of Civil Proce-
dure 12(b)(6), on which Network Solutions also relied in its motion
to dismiss, because resolution of the motion inherently requires an
assessment of whether Hawes has alleged all the elements necessary
to state a claim under § 1114(2)(D)(i)(II)(bb). See Montana-Dakota
10 HAWES v. NETWORK SOLUTIONS
Utils. Co. v. Northwestern Pub. Serv. Co., 341 U.S. 246, 249 (1951)
("As frequently happens where jurisdiction depends on subject matter,
the question whether jurisdiction exists has been confused with the
question whether the complaint states a cause of action"); Fogel v.
Chestnutt, 668 F.2d 100, 105-07 (2d Cir. 1981) (Friendly, J.)
(explaining the occasionally elusive distinction between lack of sub-
ject matter jurisdiction and failure to state a claim).
Considering the complaint against the standards applicable to a
Rule 12(b)(6) motion, Hawes failed to state a claim upon which relief
can be granted and therefore Count I must be dismissed on that basis.
The statutory provision upon which Count I rests exposes a registrar
to liability under the Lanham Act — by providing an exception to a
registrar’s general exemption from liability under the Act — when the
registrar, without court permission, transfers a domain name "during
the pendency of [an] action." 15 U.S.C. § 1114(2)(D)(i)(II)(bb).
Hawes did allege that Network Solutions tendered control over the
domain name to the French court after L’Oreal commenced an action
in France against Hawes for infringing L’Oreal’s French trademarks,
but the pendency of a foreign action is irrelevant to the question of
whether a registrar is exposed to liability under the Lanham Act. This
conclusion that the French proceedings are irrelevant to a registrar’s
liability under § 1114(2)(D)(i) is compelled by the language of the
Lanham Act as amended by the ACPA, as well as its scope and struc-
ture.
The ACPA creates a cause of action for cybersquatting against any-
one who registers, traffics in, or uses a domain name that is identical
or confusingly similar to a trademark with the bad-faith intent to
profit from the good will associated with the trademark. See 15
U.S.C. § 1125(d)(1). It also creates a cause of action for reverse
domain name hijacking against trademark owners who misuse or
abuse their rights in bringing a cybersquatting action. See 15 U.S.C.
§ 1114(2)(D)(v); Barcelona, ___ F.3d ___, 2003 WL 21259842, at
*6. The ACPA thus protects both trademark owners and domain name
registrants. In creating these causes of action, Congress intended
expressly to limit the liability of domain name registrars under the
Act as long as the domain name registrars comply with the conditions
stated in § 1114(2)(D)(i). As congressional reports explain, the ACPA
HAWES v. NETWORK SOLUTIONS 11
provides a limitation of liability for registrars to "encourage[ ] domain
name registrars and registries to work with trademark owners to pre-
vent cybersquatting through . . . the suspen[sion], cancel[ation], or
transfer [of] domain names pursuant to a court order or in the imple-
mentation of a reasonable policy prohibiting cybersquatting." H.R.
Rep. No. 106-412, at 15 (1999); S. Rep. No. 106-140, at 11 (1999).
Without such limitation of liability, all registrars would potentially
have been exposed to the offense of cybersquatting because they reg-
ister and traffic in domain names that could be infringing or diluting
trademarks protected by the Lanham Act. See 15 U.S.C. § 1125(d)(1).
Thus, § 3004 of the ACPA, which contains the language codified at
15 U.S.C. § 1114(2)(D)(i) and is captioned "Limitation on Liability,"
generally exempts domain name registrars from the liability imposed
by the Act for cybersquatting or reverse domain name hijacking.
Because the provisions conditioning the limitation of liability in
§ 1114(2)(D)(i) relate to liability imposed by the Lanham Act as
amended by the ACPA, cooperating conduct by registrars with
respect to foreign courts under foreign law is given no relevance in
interpreting § 1114(2)(D)(i)(II)(bb) insofar as it requires the pendency
of an "action."
In this case, there was no anticybersquatting action or reverse anti-
cybersquatting action under the ACPA pending in any court at the
time Network Solutions transferred the domain name . Because there was no action adjudicating Lanham Act
liability, there could be no allegation that Network Solutions was not
cooperating with a court in a domain name dispute involving domain
name hijacking or reverse domain name hijacking, and thus there
could be no basis to consider an exception from the limitation of lia-
bility. Accordingly, the district court was correct in concluding that
the complaint failed to include a necessary averment of fact in support
of a claim to find Network Solutions’ conduct fell within the excep-
tion to the limitation of liability granted by § 1114(2)(D)(i).
Thus, we agree with the district court that the claim against Net-
work Solutions must be dismissed, but we affirm this conclusion on
the basis of Federal Rule of Civil Procedure 12(b)(6).
B
Count II against L’Oreal is brought under 15 U.S.C.
§ 1114(2)(D)(v), which "authorizes a domain name registrant to sue
12 HAWES v. NETWORK SOLUTIONS
trademark owners for ‘reverse domain name hijacking.’" Barcelo-
na.com, ___ F.3d at ___, 2003 WL 21259842, at *6. Under
§ 1114(2)(D)(v), "a domain name registrant who is aggrieved by an
overreaching trademark owner may commence an action to declare
that the domain name registration or use by the registrant is not
unlawful under the Lanham Act" and to obtain injunctive relief for
return of the domain name. Id.
The district court dismissed Hawes’ reverse domain name hijack-
ing claim, concluding that, under Federal Rule of Civil Procedure
12(b)(1), it lacked subject matter jurisdiction. The court supported
this conclusion first by finding that there was no justiciable case or
controversy after the French court ordered transfer of the domain
name to L’Oreal. "[Hawes] no longer had the ability to use the dis-
puted domain name . . . because L’Oreal now owned it. [Hawes’]
desire to use the domain name is insufficient." We disagree with that
conclusion. Simply because L’Oreal now has the domain name does
not end the controversy over Hawes’ right to use the name. Indeed,
the controversy remains alive with Hawes’ claim under
§ 1114(2)(D)(v) to require transfer of the name back to Hawes.
The district court also supported its conclusion that it lacked sub-
ject matter jurisdiction because one element of Hawes’ claim under
§ 1114(2)(D)(v) was not established — "L’Oreal’s receipt of the
domain name was pursuant to a court order, and not pursuant to the
implementation of [Network Solutions’] reasonable policy." Implic-
itly, the court concluded that the element was a jurisdictional one.
Again we disagree.
While an element of a claim under § 1114(2)(D)(v), the require-
ment that the transfer be pursuant to a reasonable policy is not juris-
dictional. A § 1114(2)(D)(v) claim has four elements:
[T]o establish a right to relief against an "overreaching
trademark owner" under this reverse hijacking provision, a
plaintiff must establish (1) that it is a domain name regis-
trant; (2) that its domain name was suspended, disabled, or
transferred under a policy implemented by a registrar as
described in 15 U.S.C. § 1114(2)(D)(ii)(II); (3) that the
owner of the mark that prompted the domain name to be
HAWES v. NETWORK SOLUTIONS 13
suspended, disabled, or transferred has notice of the action
by service or otherwise; and (4) that the plaintiff’s registra-
tion or use of the domain name is not unlawful under the
Lanham Act as amended.
Barcelona.com, ___ F.3d at ___, 2003 WL 21259842, at *8. But the
statute makes none of these elements jurisdictional. Rather, jurisdic-
tion is conferred by the fact that the cause of action provided under
§ 1114(2)(D)(v) is part of the ACPA which amended the Trademark
Act of 1946 (the Lanham Act), and as such is a civil action relating
to trademarks. Section 1338 of Title 28 confers subject matter juris-
diction on federal courts for actions relating to trademarks. Thus, if
Hawes failed to allege any of the elements for a reverse domain name
hijacking claim, L’Oreal’s remedy would be to file a motion for fail-
ure to state a claim under Federal Rule of Civil Procedure 12(b)(6).
Although we agree with the district court that the failure to allege one
of the required elements would be fatal to recovery, it would not be
fatal to the district court’s jurisdiction.
But even on the district court’s assumption that a jurisdictional ele-
ment has been omitted because Network Solutions’ policy was not
involved, the court misread the complaint. The complaint alleges that
Network Solutions breached its Domain Name Registration Agree-
ment by transferring control over the domain name to a French court
or, more precisely, to counsel for L’Oreal for deposit in the French
court. It asserted that "[a]s a direct and proximate cause of said mate-
rial breach of said Domain Name Registration Agreement, [Hawes]
. . . seeks an interpretation of said Domain Name Registration Agree-
ment . . . as to whether Network [Solutions] is allowed to tender
and/or transfer to the Republic of France complete control and author-
ity over the registration of the domain name." The complaint also
quotes from the letter that Hawes’ lawyer sent to Network Solutions
and copied to L’Oreal indicating an intent to file an action "to estab-
lish that the registration and/or use of the above-referenced domain
name by [Hawes] is not unlawful." Finally, the complaint actually
included a copy of the Domain Name Registration Agreement which
includes Network Solutions’ "Domain Name Dispute Policy," pursu-
ant to which Network Solutions purportedly transferred control over
the domain name, through L’Oreal’s lawyer in France, to the French
court.
14 HAWES v. NETWORK SOLUTIONS
Fully and fairly read, the complaint alleges that the transfer of the
domain name took place pursuant to Network Solutions’ Domain
Name Dispute Policy as contained in the Domain Name Registration
Agreement, and it was because of that policy, as interpreted by Net-
work Solutions, that the Registrar Certificate was filed with the
French court and that the domain name was ultimately transferred.
Because L’Oreal is alleged to have received the domain name on the basis of Network Solutions’ interpretation of
the scope of its "Domain Name Dispute Policy," the second element
for a cause of action under § 1114(2)(D)(v) would appear to have
been adequately alleged.
In sum, as we note here and in Part II.A above, the district court
had subject matter jurisdiction over Hawes’ claim brought under the
Lanham Act as amended by the ACPA, and Hawes’ complaint pur-
ports to state a claim against L’Oreal alleging a cause of action under
that Act.*
We should add that our conclusion that Hawes’ complaint states a
cause of action under § 1114(2)(D)(v) over which a United States
court may exercise jurisdiction does not imply any disrespect of any
French court that may have taken jurisdiction of a related dispute in
France. The cause of action supplied by Congress in the ACPA is an
American cause of action provided to protect domain name registrants
*An additional rationale advanced by the district court in dismissing
the case was that it possessed discretion under the Declaratory Judgment
Act to decline to grant declaratory relief. It is true that a district court
possesses discretion in deciding whether to grant a declaratory judgment
under 28 U.S.C. § 2201. See Wilton v. Seven Falls Co., 515 U.S. 277,
286 (1995) ("Since its inception, the Declaratory Judgment Act has been
understood to confer on federal courts unique and substantial discretion
in deciding whether to declare the rights of litigants"). This discretion
finds its justification in the particular language that Congress used in
§ 2201 authorizing federal courts to enter declaratory judgment. See id.
(highlighting 28 U.S.C. § 2201’s "textual commitment to discretion").
But a federal district court possesses no similar discretion in adjudicating
an action brought under 15 U.S.C. § 1114(2)(D)(v), in which Congress
created a new and independent cause of action and, unlike in § 2201,
used no language indicating that a district court may exercise discretion
regarding whether to grant declaratory relief.
HAWES v. NETWORK SOLUTIONS 15
from overreaching trademark owners, by supplying a cause of action
for adjudication in a federal court under the law of the United States.
See Barcelona.com, ___ F.3d at ___, 2003 WL 21259842, at *9 ("The
text of the ACPA explicitly requires application of the Lanham Act,
not foreign law, to resolve an action brought under 15 U.S.C.
§ 1114(2)(D)(v)"). Adjudication of an action brought under
§ 1114(2)(D)(v) involves neither appellate-like review of, nor defer-
ence to, any simultaneously pending actions in foreign jurisdictions
just as adjudication of an action brought under § 1114(2)(D)(v) on the
heels of an administrative proceeding under Network Solutions’ dis-
pute resolution policy by the World Intellectual Property Organization
or some other dispute resolution provider is independent of, and
involves neither appellate-like review of nor deference to, the under-
lying proceeding. See id. at *7 ("We give the decision of the [World
Intellectual Property Organization] panelists no deference in deciding
this action under § 1114(2)(D)(v)"); id. at *6 (stating that the uniform
dispute resolution policy that is part of domain name registration
agreements "explicitly anticipates that judicial proceedings will con-
tinue under various nations’ laws applicable to the parties"); id. at *7
("[B]ecause a uniform dispute resolution policy decision is suscepti-
ble of being grounded on principles foreign or hostile to American
law, the ACPA authorizes reversing a [World Intellectual Property
Organization] panel decision if such a result is called for by applica-
tion of the Lanham Act"). In both circumstances, the § 1114(2)(D)(v)
action involves an independent inquiry to determine whether the reg-
istration or use of the domain name is "not unlawful" under the Lan-
ham Act as amended by the ACPA.
Although a § 1114(2)(D)(v) cause of action may be brought in a
United States court and requires application of only United States
law, this fact does not leave the foreign trademark owner bereft of
protection. The trademark owner remains free to file a counterclaim
or counterclaims, as L’Oreal did in this case, asserting any rights that
it may have under United States law. See 15 U.S.C. § 1125; Int’l Ban-
corp, LLC v. Societe des Bains de Mer et du Cercle des Estrangers
a Monaco, 329 F.3d 359 (4th Cir. 2003) (recognizing the reach of the
Lanham Act to include foreign commerce).
In holding that Hawes has alleged a cause of action under 15
U.S.C. § 1114(2)(D)(v) over which the district court had subject mat-
16 HAWES v. NETWORK SOLUTIONS
ter jurisdiction, we do not imply whether he will succeed in his fur-
ther prosecution of this action. Nonetheless, the action must be
entertained, and therefore we remand this case for further proceedings
against L’Oreal.
In view of our reversal of the district court’s dismissal order, we
expect that the district court will allow L’Oreal to reinstate its coun-
terclaims for adjudication with Hawes’ claim under § 1114(2)(D)(v).
AFFIRMED IN PART, REVERSED
IN PART, AND REMANDED