II. CYBERSQUATTING
[53] Cybersquatting is the Internet version of a land grab. Cybersquatters register well-known brand names as Internet domain names in order to force the rightful owners of the marks to pay for the right to engage in electronic commerce under their own name. See Virtual Works, Inc. v. Volkswagen of America Inc., 238 F.3d 264, 267 (4th Cir. 2001). Congress enacted the ACPA because cybersquatting "threatened 'the continued growth and vitality of the Internet as a platform' for 'communication, electronic commerce, education, entertainment, and countless yet-to-be-determined uses." Id. (quoting S. Rep. No. 106-140, at 8 (1999)).
[54] A cybersquatter is liable under the ACPA to the owner of a protected mark if the cybersquatter has:
[55] (i) a bad faith intent to profit from that mark; and
[56] (ii) registers, traffics in, or uses a domain name that --
[57] (I) in the case of mark that is distinctive
[58] . . . , is identical or confusingly similar to that mark that is distinctive.
[59] (II) in the case of a famous mark . . . , is identical or confusingly similar to or dilutive of that mark. See 15 U.S.C. ç 1125(d)(1)(A) (emphasis added).
[60]
A finding of "bad faith" is an essential prerequisite to finding an ACPA violation. Congress enumerated a list of nine factors to consider "in determining whether a person has a bad faith intent." Id. Congress did
not mean these factors to be
an exclusive list; instead, "the most important grounds for finding bad faith are 'the unique circumstances of the case, which do not fit neatly into the specific factors enumerated by Congress.' " Virtual Works, 238 F.3d at 271 (4th Cir. 2001) (quoting Sporty's Farm LLC v. Sportsman's Market, Inc., 202 F.3d 489, 495 (2d Cir. 2000)). In addition, the ACPA contains a
safe harbor provision: Bad faith "shall not be found in any case in which the court determines that the person believed and had a reasonable grounds to believe that the use of the domain name was fair use or otherwise lawful." 15 U.S.C. ç 1125(d)(1)(B)(ii).
[61] In this case, the district court expressly determined only whether ISS violated the ACPA by registering the domain name
www.epix.cc -- a domain name which Epix now owns and which is not at issue on appeal. The district court did not consider Epix's ACPA claim as it related to ISS's use of the
www.epix.com.
[62] The district court found, however, that
Tchou and ISS adopted the www.epix.com domain name in good faith. In particular, it determined that Tchou adopted the domain name epix.com as a descriptive term to connote electronic pictures.
Evidencing his good faith, Tchou performed a web search on "epix" before registering epix.com, but did not find Epix because it was not yet on the Internet. Furthermore, Tchou engaged in a bona fide use of his website. To transform his website into a "widely known internet portal site," Tchou continuously used the domain name and invested money on hardware and software as well as significant amounts of time on the development of a viable business plan.
[63] The district court rejected Epix's farfetched idea that Tchou registered epix.com in an effort to assist his employer and Epix competitor, Intel. The district court did not, however, comment on Epix's
other purported evidence of bad faith -- ISS's offer to sell Epix the epix.com domain name for $25,000. While offers to sell a contested domain name may in certain circumstances be probative evidence of bad faith, see Panavision Int'l L.P. v. Toeppen, 141 F.3d 1316, 1323 (9th Cir. 1998),
here, the offer to sell came from ISS's attorney in the context of settlement negotiations after the commencement of litigation; Tchou was not even present. Epix never established before the district court that the settlement offer was made to extort Epix or for any reason other than to settle the case. Rather, the evidence suggests that ISS offered to sell its investment in hardware, software, and time in an operational website devoted to the Clinton Street Cabaret.
[64] The district court's finding that Tchou adopted
www.epix.com in good faith was not clearly erroneous considering the "unique circumstances" of this case.
Without a finding of bad faith, Epix's cybersquatting claim necessarily fails.