Shields v. Zuccarini

Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit
6-15-2001
Shields v. Zuccarini
Precedential or Non-Precedential:
Docket 00-2236
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Recommended Citation
"Shields v. Zuccarini" (2001). 2001 Decisions. Paper 131.
http://digitalcommons.law.villanova.edu/thirdcircuit_2001/131
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Filed June 15, 2001
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-2236
JOSEPH C. SHIELDS, individually
and trading as THE JOE CARTOON
COMPANY
v.
JOHN ZUCCARINI, individually
and trading as CUPCAKE CITY;
NETWORK SOLUTIONS, INC.;
INTERNET CORPORATION, FOR
ASSIGNED NAMES AND NUMBERS
John Zuccarini, Individually
and trading as Cupcake City,
Appellant
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 00-cv-00494)
District Judge: Honorable Stewart Dalzell
Argued: April 24, 2001
Before: BARRY, AMBRO and ALDISER T, Circuit Judges.
(Filed: June 15, 2001)
Howard M. Neu (Argued)
1152 North University Drive
Pembroke Pines, Florida 33024
ATTORNEY FOR APPELLANT
Michael P. Coughlin
William J. Levant (Argued)
KAPLIN STEWART MELOFF
REITER & STEIN, P.C.
350 Sentry Parkway, Building 640
P.O. Box 3037
Blue Bell, Pennsylvania 19422-1240
ATTORNEYS FOR APPELLEE
OPINION OF THE COURT
ALDISERT, Circuit Judge.
John Zuccarini appeals from the district court's grant of
summary judgment and award of statutory damages and
attorneys' fees in favor of Joseph Shields under the new
Anticybersquatting Consumer Protection Act ("ACPA" or
"Act"). In this case of first impression in this court
interpreting the ACPA, we must decide whether the district
court erred in determining that r egistering domain names
that are intentional misspellings of distinctive or famous
names constitutes unlawful conduct under the Act. W e
must decide also whether the district court abused its
discretion by assessing statutory damages of $10,000 per
domain name. Finally, we must decide whether the court
erred in awarding attorneys' fees in favor of Shields based
on its determination that this case qualified as an
"exceptional" case under the ACPA. W e affirm the judgment
of the district court.
The district court had jurisdiction pursuant to 28 U.S.C.
S 1331. This court has jurisdiction by virtue of 28 U.S.C.
SS 41 and 1291.
I.
Shields, a graphic artist from Alto, Michigan, creates,
exhibits and markets cartoons under the names "Joe
Cartoon" and "The Joe Cartoon Co." His cr eations include
the popular "Frog Blender," "Micro-Gerbil" and "Live and
Let Dive" animations. Shields licenses his cartoons to
2
others for display on T-shirts, coffee mugs and other items,
many of which are sold at gift stores acr oss the country. He
has marketed his cartoons under the "Joe Cartoon" label
for the past fifteen years.
On June 12, 1997, Shields registered the domain name
joecartoon.com, and he has operated it as a web site ever
since. Visitors to the site can download his animations and
purchase Joe Cartoon merchandise. Since April 1998, when
it won "shock site of the day" from Macr omedia, Joe
Cartoon's web traffic has increased exponentially, now
averaging over 700,000 visits per month.
In November 1999, Zuccarini, an Andalusia,
Pennsylvania "wholesaler" of Internet domain names,1
registered five world wide web variations on Shields's site:
joescartoon.com, joecarton.com, joescartons.com,
joescartoons.com and cartoonjoe.com. Zuccarini's sites
featured advertisements for other sites and for credit card
companies. Visitors were trapped or"mousetrapped" in the
sites, which, in the jargon of the computer world, means
that they were unable to exit without clicking on a
succession of advertisements. Zuccarini received between
ten and twenty-five cents from the advertisers for every
click.
In December 1999, Shields sent "cease and desist" letters
to Zuccarini regarding the infringing domain names.
Zuccarini did not respond to the letters. Immediately after
Shields filed this suit, Zuccarini changed thefive sites to
"political protest" pages and posted the following message
on them:
This is a page of POLITICAL PROTEST
- Against the web site joecartoon.com -
joecartoon.com is a web site that depicts the mutilation
and killing of animals in a shockwave based cartoon
format -- many children are inticed [sic] to the web
site, not knowing what is really there and then
encouraged to join in the mutilation and killing
_________________________________________________________________
1. "Wholesaling" refers to the practice of acquiring multiple domain
names with the intent to profit from them.
3
through use of the shockwave cartoon pr esented to
them.
- Against the domain name policys [sic] of ICANN -
- Against the Cyberpiracy Consumer Protection Act -
As the owner of this domain name, I am being sued by
joecartoon.com for $100,000 so he can use this domain
to direct more kids to a web site that not only
desensitizes children to killing animals, but makes it
seem like great fun and games.
I will under no circumstances hand this domain name
over to him so he can do that.
I hope that ICANN and Network Solutions will not
assist him to attaining this goal.
-Thank You-
Shields v. Zuccarini, 89 F. Supp. 2d 634, 635-636 (E.D. Pa.
2000).
Shields's Complaint invoked the ACPA as well as federal
and state unfair competition law and sought injunctive
relief, statutory damages and attorneys' fees. The
Complaint originally named Network Solutions, Inc. and the
Internet Corporation for Assigned Names and Numbers as
defendants, but on February 11, 2000, Shields filed a
voluntary notice of dismissal with respect to these
defendants.
On March 17, 2000, the district court denied Shields's
Motion for Summary Judgment,2 holding that Zuccarini
_________________________________________________________________
2. With respect to Shields's Motion for Summary Judgment on the ACPA
claim, the district court noted the following:
(k) While this [Zuccarini's admission that he registered variations
of "joecartoon.com" because they were confusingly similar]
would seem to be clear evidence of Zuccarini's bad faith, he
claims in his response to the motion for summary judgment
that his use of the variations was fair and lawful, and that he
is using the domain names ``for the purpose of exercising his
First Amendment rights of protest against the Plaintiff 's domain
which has objectionable and offensive material.'
4
had raised a material issue of fact under the ACP A. After
affording the parties a brief time for expedited discovery,
the court held a hearing on Shields's request for injunctive
relief. On March 22, 2000, the court enter ed a preliminary
injunction in favor of Shields, which requir ed Zuccarini to
transfer the infringing domain names to Shields and to
refrain from "using or abetting the use of " the infringing
domain names or any other domain names substantially
similar to Shields's marks.
On May 2, 2000, Shields filed a Renewed Motion for
Summary Judgment. Zuccarini filed no response. On June
5, 2000, the court entered an Order granting summary
judgment in favor of Shields, holding that Zuccarini had
registered five variations of Shields's name willfully, in bad
faith, and in violation of the Act. On June 16, 2000, Shields
filed a Motion for Attorneys' Fees and Costs pursuant to 15
U.S.C. S 1117(a). Zuccarini opposed the Motion contending
that his conduct did not rise to the level of exceptional
circumstances and that the injunction pr ovided Shields
with adequate relief.
On July 18, 2000, the district court entered an Order
and Judgment awarding statutory damages in the amount
of $10,000 for each infringing domain name and attor neys'
fees and costs in the amount of $39,109.46. Zuccarini filed
a timely Notice of Appeal on July 26, 2000.
II.
We conduct plenary review of a grant of summary
judgment, applying the same standard as the district court.
Watson v. Eastman Kodak Co., 235 F .3d 851, 854 (3d Cir.
2000). "Summary judgment is properly granted if ``the
pleadings, depositions, answers to interrogatories, and
_________________________________________________________________
(l) We find that Zuccarini's claim of fair use creates a genuine
issue of material fact precluding summary judgment at this
point, particularly since he only recently retained counsel and
had not yet had a full opportunity to take discovery or
formulate his defense.
App. at 249 (emphasis added) (internal citations omitted).
5
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and
that the moving party is entitled to judgment as a matter of
law.' " Celotex Corp. v. Catrett , 477 U.S. 317, 323 (1986)
(quoting Rule 56(c), Federal Rules of Civil Pr ocedure). If the
moving party meets the initial burden of showing that there
is no genuine issue of material fact, the bur den shifts to the
non-moving party to set forth specific facts showing the
existence of such an issue for trial. Rule 56(e), Federal
Rules of Civil Procedure. In reviewing the district court's
grant of summary judgment, we must view the evidence in
the light most favorable to the non-moving party. See
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
We review a trial court's award of statutory damages for
abuse of discretion. Nihon Keizai Shimbun, Inc. v. Comline
Business Data, Inc., 166 F.3d 65, 74 (2d Cir. 1999). Our
review of the scope and the meaning of the ter m
"exceptional," as used in 15 U.S.C. S 1117(a), is plenary.
Securacomm Consulting, Inc. v. Securacom, Inc., 224 F.3d
273, 279 (3d Cir. 2000).
III.
On November 29, 1999, the ACPA became law, making it
illegal for a person to register or to use with the "bad faith"
intent to profit from an Internet domain name that is
"identical or confusingly similar" to the distinctive or
famous trademark or Internet domain name of another
person or company. See 15 U.S.C. S 1125(d) (Supp. 2000).
The Act was intended to prevent "cybersquatting," an
expression that has come to mean the bad faith, abusive
registration and use of the distinctive trademarks of others
as Internet domain names, with the intent to profit from
the goodwill associated with those trademarks. See S. Rep.
No. 106-140 (1999), 1999 WL 594571, at *11-18. Under the
ACPA, successful plaintiffs may r ecover statutory damages
in an amount to be assessed by the district court in its
discretion, from $1,000 to $100,000 per domain name. See
15 U.S.C. S 1117(d) (Supp. 2000). In addition, successful
plaintiffs may recover attorneys' fees in "exceptional" cases.
See id. at S 1117(a).
6
In Shields's Renewed Motion for Summary Judgment for
relief under the Act, he asked the district court to (1)
permanently enjoin Zuccarini from using the infringing
domain names and any other domain names substantially
similar thereto; (2) direct Zuccarini to transfer the
infringing domain names to Shields; and (3) awar d
attorneys' fees and statutory damages under 15 U.S.C.
S 1117(a) and (d), respectively.
In deciding whether to grant a permanent injunction, the
district court must consider whether: (1) the moving party
has shown actual success on the merits; (2) the moving
party will be irreparably injured by the denial of injunctive
relief; (3) the granting of the permanent injunction will
result in even greater harm to the defendant; and (4) the
injunction would be in the public interest. See ACLU v.
Black Horse Pike Reg'l Bd. of Educ., 84 F .3d 1471, 1477 nn.
2-3 (3d Cir. 1996).
A.
To succeed on his ACPA claim, Shields was required to
prove that (1) "Joe Cartoon" is a distinctive or famous mark
entitled to protection; (2) Zuccarini's domain names are
"identical or confusingly similar to" Shields's mark; and (3)
Zuccarini registered the domain names with the bad faith
intent to profit from them. See 15 U.S.C. S 1125 (d)(1)(A); cf.
Sporty's Farm L.L.C. v. Sportsman's Market Inc., 202 F.3d
489, 497-499 (2d Cir. 2000).3
_________________________________________________________________
3. Section 1125(d)(1)(A) of the Act provides in relevant part:
A person shall be liable in a civil action by the owner of a mark .
. .
if, without regard to the goods or services of the parties, that
person
(i) has a bad faith intent to profit from that mark, including a
personal name which is protected as a mark under this
section; and
(ii) registers, traffics in, or uses a domain name that --
(I) in the case of a mark that is dist inctive at the time of
registration of the domain name, is identical or
confusingly similar to that mark;
(II) in the case of a famous mark that is famous at the time
of registration of the domain name, is identical or
confusingly similar to or dilutive of that mark.
7
1.
Under S 1125(d)(1)(A)(ii)(I) and (II), the district court first
had to determine if "Joe Cartoon" is a"distinctive" or
"famous" mark and, therefore, is entitled to protection
under the Act. The following factors may be consider ed
when making this inquiry:
(A) the degree of inherent or acquir ed distinctiveness of
the mark; (B) the duration and extent of use of the
mark in connection with the goods or services with
which the mark is used; (C) the duration and extent of
advertising and publicity of the mark; (D) the
geographical extent of the trading area in which the
mark is used; (E) the channels of trade for the goods or
services with which the mark is used; (F) the degr ee of
recognition of the mark in the trading ar eas and
channels of trade used by the marks' owner and the
person against whom the injunction is sought; (G) the
nature and extent of use of the same or similar marks
by third parties.
15 U.S.C. S 1125(c)(1).
Shields runs the only "Joe Cartoon" operation in the
nation and has done so for the past fifteen years. This
suggests both the inherent and acquired distinctiveness of
the "Joe Cartoon" name. In addition to using the "Joe
Cartoon" name for fifteen years, Shields has used the
domain name joecartoon.com as a web site since June
1997 to display his animations and sell products featuring
his drawings. The longevity of his use suggests that"Joe
Cartoon" has acquired some fame in the marketplace. The
New York Times ran a page one story that quoted Shields
and cited Joe Cartoon. See Andrew Pollack, Show Business
Embraces the Web, But Cautiously, N.Y . Times, Nov. 9,
1999, at A1.
Joe Cartoon T-shirts have been sold acr oss the country
since at least the early 1990s, and its products appear on
the web site of at least one nationally known r etail chain,
Spencer Gifts. Shields has advertised in an online humor
magazine with a circulation of about 1.4 million. The Joe
Cartoon web site receives in excess of 700,000 visits per
month, bringing it wide publicity. According to Shields,
8
word-of-mouth also generates considerable inter est in the
Joe Cartoon site. Shields trades nationwide in both real
and virtual markets. The web site gives Joe Cartoon a
global reach. Shields's cartoons and mer chandise are
marketed on the Internet, in gift shops and at tourist
venues. The Joe Cartoon mark has won a huge following
because of the work of Shields. In light of the above, we
conclude that "Joe Cartoon" is distinctive, and, with
700,000 hits a month, the web site "joecartoon.com"
qualifies as being famous. Therefore, the trademark and
domain name are protected under the ACP A.
2.
Under the Act, the next inquiry is whether Zuccarini's
domain names are "identical or confusingly similar" to
Shields's mark. The domain names --joescartoon.com,
joecarton.com, joescartons.com, joescartoons.com and
cartoonjoe.com -- closely resemble "joecartoon.com," with a
few additional or deleted letters, or, in the last domain
name, by rearranging the order of the wor ds. To divert
Internet traffic to his sites, Zuccarini admits that he
registers domain names, including the five at issue here,
because they are likely misspellings of famous marks or
personal names.4 The strong similarity between these
domain names and joecartoon.com persuades us that they
are "confusingly similar." Shields also produced evidence of
Internet users who were actually confused by Zuccarini's
sites. See, e.g., Pltf 's Exh. 22, at [4] (copy of an email
stating, "I tried to look up you[r] website yesterday
afternoon and a protest page came up. W ill I have trouble
entering the site at times because of this?").
On appeal, Zuccarini argues that registering domain
names that are intentional misspellings of distinctive or
famous names (or "typosquatting," his ter m for this kind of
conduct) is not actionable under the ACPA. Zuccarini
contends that the Act is intended to prevent
_________________________________________________________________
4. Zuccarini testified that he was amazed to learn that "people mistype
[domain names] as often as they do," and thus variants on likely search
names would result in many unintended visitors to his sites. Shields, 89
F. Supp. 2d at 640.
9
"cybersquatting," which he defines as r egistering someone's
famous name and trying to sell the domain name to them
or registering it to prevent the famous person from using it
themselves. This argument ignores the plain language of
the statute and its stated purpose as discussed in the
legislative history.
The statute covers the registration of domain names that
are "identical" to distinctive or famous marks, but it also
covers domain names that are "confusingly similar" to
distinctive or famous marks. See 15 U.S.C.
S 1125(d)(1)(A)(ii)(I), (II). A reasonable interpretation of
conduct covered by the phrase "confusingly similar" is the
intentional registration of domain names that are
misspellings of distinctive or famous names, causing an
Internet user who makes a slight spelling or typing error to
reach an unintended site. The ACPA's legislative history
contemplates such situations:
[C]ybersquatters often register well-known marks to
prey on consumer confusion by misusing the domain
name to divert customers from the mark owner's site to
the cybersquatter's own site, many of which ar e
pornography sites that derive advertising r evenue
based on the number of visits, or "hits," the site
receives. For example, the Committee was infor med of
a parent whose child mistakenly typed in the domain
name for ``dosney.com,' expecting to access the family-
oriented content of the Walt Disney home page, only to
end up staring at a screen of hardcor e pornography
because a cybersquatter had registered that domain
name in anticipation that consumers would make that
exact mistake.
S. REP. NO. 106-140 (1999), 1999 WL 594571, at *15
(emphasis added).
Although Zuccarini's sites did not involve por nography,
his intent was the same as that mentioned in the legislative
history above -- to register a domain name in anticipation
that consumers would make a mistake, thereby increasing
the number of hits his site would receive, and,
consequently, the number of advertising dollars he would
gain. We conclude that Zuccarini's conduct here is a classic
10
example of a specific practice the ACPA was designed to
prohibit. The district court properly found that the domain
names he registered were "confusingly similar."
3.
The final inquiry under the ACPA is whether Zuccarini
acted with a bad faith intent to profit fr om Shields's
distinctive and famous mark or whether his conduct falls
under the safe harbor provision of the Act. Section
1125(d)(1)(B)(i) provides a non-exhaustive list of nine
factors for us to consider when making this deter mination:
(I) the trademark or other intellectual property rights of
the person, if any, in the domain name; (II) the extent
to which the domain name consists of the legal name
of the person or a name that is otherwise commonly
used to identify that person; (III) the person's prior use,
if any, of the domain name in connection with the bona
fide offering of any goods or services; (IV) the person's
bona fide noncommercial or fair use of the mark in a
site accessible under the domain name; (V) the
person's intent to divert consumers from the mark
owner's online location to a site accessible under the
domain name that could harm the goodwill r epresented
by the mark, either for commercial gain or with the
intent to tarnish or disparage the mark, by cr eating a
likelihood of confusion as to the source, sponsorship,
affiliation, or endorsement of the site; (VI) the person's
offer to transfer, sell, or otherwise assign the domain
name to the mark owner or any third party for
financial gain without having used, or having an intent
to use, the domain name in the bona fide of fering of
any goods or services, or the person's prior conduct
indicating a pattern of such conduct; (VII) the person's
provision of material and misleading false contact
information when applying for the registration of the
domain name, the person's intentional failur e to
maintain accurate contact information, or the person's
prior conduct indicating a pattern of such conduct;
(VIII) the person's registration or acquisition of multiple
domain names which the person knows are identical or
confusingly similar to marks of others that ar e
11
distinctive at the time of registration of such domain
names, or dilutive of famous marks of others that ar e
famous at the time of registration of such domain
names, without regard to the goods or services of the
parties; and (IX) the extent to which the mark
incorporated in the person's domain name registration
is or is not distinctive and famous within the meaning
of subsection (c)(1) of this section.
Zuccarini's conduct satisfies a number of these factors.
Zuccarini has never used the infringing domain names as
trademarks or service marks; thus, he has no intellectual
property rights in these domain names. See id. at (B)(i)(I).
The domain names do not contain any variation of the legal
name of Zuccarini, nor any other name commonly used to
identify him. See id. at (B)(i)(II). Zuccarini has never used
the infringing domain names in connection with the bona
fide offering of goods or services. See id. at (B)(i)(III). He
does not use these domain names for a non-commer cial or
"fair use" purpose. See id. at (B)(i)(IV). He deliberately
maintains these domain names to divert consumers fr om
Shields's web site. In so doing, he harms the goodwill
associated with the mark. He does this either for
commercial gain, or with the intent to tar nish or disparage
Shields's mark by creating a likelihood of confusion. See id.
at (B)(i)(V). He has knowingly register ed thousands of
Internet domain names that are identical to, or confusingly
similar to, the distinctive marks of others, without the
permission of the mark holders to do so.5 See id. at
_________________________________________________________________
5. During his deposition and at the preliminary injunction hearing,
Zuccarini admitted that he registered the variations of "Joe Cartoon," as
well as thousands of other domain names, because they are confusingly
similar to others' famous marks or personal names-- and thus are likely
misspellings of these names -- in an effort to divert Internet traffic to
his
sites. He has registered obvious misspellings of celebrities' names, such
as gwenythpaltrow.com, rikymartin.com, and britineyspears.com. He has
also registered variations on popular pr oduct and web site names, like
sportillustrated.com, mountianbikes.com, and msnchatrooms.com.
Although we do not determine whether Zuccarini's conduct in each of
these other cases is itself a violation of the Act, nonetheless his
pattern
of behavior is consistent with a bad faith intent to profit. See Northern
Light Tech., Inc. v. Northern Lights Club, 236 F.3d 57, 65 (1st Cir.
2001).
12
(B)(i)(VIII). We have already established that Shields's mark
is distinctive and famous. See id. at (B)(i)(IX).
Zuccarini argues that his web sites wer e protected by the
First Amendment because he was using them as self-
described "protest pages." Therefor e, he contends, his use
falls under the safe harbor provision of S 1125(d)(1)(B)(ii),
which states that "[b]ad faith intent . . . shall not be found
in any case in which the court determines that the person
believed and had reasonable grounds to believe that the use
of the domain name was a fair use or otherwise lawful." The
district court rejected this argument based on its
conclusion that Zuccarini's claim of good faith and fair use
was a "spurious explanation cooked up pur ely for this suit."
Shields, 85 F. Supp. 2d at 640. W e agree.
Zuccarini used his "Joe Cartoon" web sites for purely
commercial purposes before Shields filed this action.
Zuccarini was on notice that his use of the domain names
was considered unlawful when he received the cease and
desist letters from Shields in December 1999. Zuccarini
continued to use the infringing domain names for
commercial purposes until Shields filed this lawsuit.
Zuccarini testified that he put up the protest pages at 3:00
a.m. on February 1, 2000, just hours after being served
with Shields's Complaint. Thus, by his own admission,
Zuccarini submits that his alleged "fair use" of the
offending domain names for "political pr otest" began only
after Shields brought this action alleging a violation of the
ACPA. We are aware of no authority providing that a
defendant's "fair use" of a distinctive or famous mark only
after the filing of a complaint alleging infringement can
absolve that defendant of liability for his earlier unlawful
activities. Indeed, were there such authority we think it
would be contrary to the orderly enforcement of the
trademark and copyright laws.
We conclude that the district court pr operly rejected
Zuccarini's argument that his web sites wer e protected
under the safe harbor provision. There was sufficient
evidence for the district court to find that Zuccarini acted
with a bad faith intent to profit when he r egistered and
used the five domain names at issue here.
13
B.
The district court correctly concluded that there is a
substantial likelihood of confusion, as well as actual
evidence of confusion, between Zuccarini's infringing
domain names and the "Joe Cartoon" mark. In Opticians
Ass'n v. Indep. Opticians, 920 F.2d 187, 196 (3d Cir. 1990),
a trademark infringement case, we held that a finding of
irreparable injury can be based on a finding of a likelihood
of confusion. The district court determined that Shields will
suffer damage to his reputation and a loss of goodwill if
Zuccarini is allowed to operate his offending web sites.
Shields's livelihood and fame depend, in lar ge part, on
Internet users being able to access his sites, and he does
not want his audience trapped in Zuccarini's sites or put off
by images displayed thereon which they may attribute to
him. The district court properly determined that Shields
would be irreparably harmed if the court did not grant the
permanent injunction.
Zuccarini testified that he has more than thr ee thousand
web sites and earns between $800,000 and $1,000,000 a
year from their use. The court determined that any
economic harm from the loss of the five infringing domain
names would be trivial. In Opticians Ass'n, 920 F.2d at 197,
this court held that, in trademark cases, "public interest
. . . is a synonym for the right of the public not to be
deceived or confused." Zuccarini admitted that he is in the
business of profiting from the public's confusion and that
he does, in fact, profit from this confusion. The district
court properly concluded that this injunction would be in
the public interest.
The district court did not err in determining that the
elements for granting a permanent injunction set forth in
ACLU v. Black Horse Pike Reg'l Bd. of Educ., 84 F.3d 1471,
1477 nn. 2-3 (3d Cir. 1996) were satisfied, thereby entitling
Shields to a permanent injunction and summary judgment
on his ACPA claim.
IV.
The Act provides for statutory damages for a violation of
S 1125(d)(1) "in the amount of not less than $1,000 and not
14
more than $100,000 per domain name, as the court
considers just." 15 U.S.C. S 1117(d). Zuccarini argues that
S 1117(d) does not apply to him because he r egistered the
offending domain names before the ACP A became law. The
district court held that Zuccarini's continued use of the
domain names after November 29, 1999 subjects him to the
statute's proscriptions and remedies. W e agree with the
teachings of Virtual Works, Inc. v. Volkswagen of America,
Inc., 238 F.3d 264, 268 (4th Cir. 2001) ("A person who
unlawfully registers, traffics in, or uses a domain name
after the ACPA's date of enactment, November 29, 1999,
can be liable for monetary damages . . . .") (emphasis
added); and E. & J. Gallo Winery v. Spider Webs Ltd., 129
F. Supp. 2d 1033, 1047-1048 (S.D. Tex. 2001) (holding that
defendant who registered domain name in bad faith could
be held liable for statutory damages even though
registration was prior to enactment of the ACP A when
defendant continued to use web site after the enactment of
the Act).
In the alternative, Zuccarini argues that he only used the
web site for sixty days after the passage of the ACP A and
prior to this lawsuit being filed. He implies that, because he
only used the web site for a short period of time, the
district court's assessment of statutory damages was
punitive in nature. Under the statute, the court has the
discretion to award statutory damages that it "considers
just" within a range from $1,000 to $100,000 per infringing
domain name. See 15 U.S.C. S 1117(d). There is nothing in
the statute that requires that the court consider the
duration of the infringement when calculating statutory
damages. We conclude that the district court properly
exercised its discretion in awarding $10,000 for each
infringing domain name.
V.
The ACPA provides that "[t]he court in exceptional cases
may award reasonable attorney fees to the prevailing
party." 15 U.S.C. S 1117(a). In trademark infringement
cases, this court has held that "a district court must make
a finding of culpable conduct on the part of the losing
party, such as bad faith, fraud, malice or knowing
15
infringement before a case qualifies as ``exceptional.' "
Ferrero U.S.A., Inc. v. Ozak T rading, Inc., 952 F.2d 44, 47
(3d Cir. 1991). The district court found that Zuccarini acted
willfully and in bad faith when he register ed the "Joe
Cartoon" domain names in an effort to confuse people and
to divert Internet traffic to his web sites for his own
economic gain. The court found that Zuccarini conducted
no bona fide business related to Joe Cartoon and that he
had no basis on which to believe his use of the domain
names was fair and lawful.
Although the term "bad faith" is written into
S 1125(d)(1)(A)(i) such that it is a thr eshold finding for any
violation of the ACPA, we are persuaded that the district
court made a proper finding that, under the circumstances,
this case qualified as "exceptional" and merited the award
of attorneys' fees under S 1117(a). 6 The record indicates
that Zuccarini's conduct was particularly flagrant 7 and that
he showed no remorse for his actions. The court stated that
"based on the egregiousness of Zuccarini's conduct and his
lack of contrition, we without hesitation hold that this is an
``exceptional' case and that Shields was entitled to an award
of attorneys' fees." App. at A25. The court's interpretation
of what constitutes an "exceptional" case under the ACPA is
proper.
We have considered all contentions pr esented by the
parties and conclude that no further discussion is
necessary.
The judgment and the award of statutory damages and
attorneys' fees will be affirmed.
_________________________________________________________________
6. In determining that this case is "exceptional" under S 1117(a), we do
so without deciding whether the finding of "bad faith" under
S 1125(d)(1)(A)(i) automatically warrants an award of attorneys' fees
under S 1117(a) and the case law that has interpreted that provision. See
Ferrero U.S.A., Inc., 952 F .2d at 47.
7. Between the issuance of the March 22, 2000 preliminary injunction,
through the date of the determination that he violated the ACPA, and up
until the date of the hearing to determine statutory damages and
attorneys' fees and costs, Zuccarini r egistered an additional 1,644
domain names that were common misspellings of other famous
companies' and/or celebrities' names.
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A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
17