Cybersquatting Law Firm Case | Bad Faith Cybersquatting Statutory Damages

Statutory damages provided in bad faith cybersquatting lawsuit: 

In a recent cybersquatting case decided on April 18, 2011, the 4th Circuit Court of Appeals affirmed the District Court’s finding of bad faith cybersquatting by defendant as a matter of law and award of $80,000 in statutory damages.  The decision titled Newport News Holdings Corporation v. Virtual City Vision Incorporated VCV can be found here. 

This internet case is interesting because of the lower court’s finding of bad faith cybersquatting as a matter of law on plaintiff’s motion for summary judgment.  Many of these cybersquatting cases under the Anticybersquatting Consumer Protection Act are clear instances of bad faith intent to profit.  However, there is relatively little internet case law on the subject, leaving many courts confused as to exactly how to apply the “bad faith intent to profit” elements under the Anticybersquatting Consumer Protection Act (ACPA), also known as the Anti Cyberpiracy Protection Act.   Here, there was no question about the trademark for “NEWPORT NEWS” in the international class and description of services for women’s apparel.  There was no dispute that in 1997, defendant changed its domain www.newportnews.com from information and news from the Newport News area, to primarily advertize and market ads for women’s apparel.  There was no question that there would be confusion of consumers in comparing the www.newportnews.com website with plaintiff’s trademark (note the court does a nice analysis of the difference between showing confusion in a trademark infringement case, versus an ACPA).  The lower court awarded $80,000 in statutory damages plus attorney’s fees in favor of plaintiff.  With regard to the cybersquatting attorney’s fee award, the court of appeals noted:

"We have noted that the legislative history of the Lanham Act shows that fees were intended to be provided in cases involving “[d]eliberate and flagrant infringement.” Scotch Whisky Ass'n v.. Majestic Distilling Co., 958 F.2d 594, 599 (4th Cir.1992) (quoting legislative history). Here, the district court found that VCV's conduct was exceptional precisely because “its actions in transforming the virtual city website into a women's fashion website after being made aware [by the ICANN decision] of the rights that NNHC had in the NEWPORT NEWS mark were clearly willful and deliberate.” J.A. 2125. Significantly, VCV advances no factual basis for finding to the contrary."

The first thing that a cybersquatting law firm would naturally focus on in reviewing this case is the arguably generic or descriptive use of the words “Newport News.”  The domain name newportnews.com would normally be immune from trademark attack.  Here, the plaintiff had filed a trademark for “NEWPORT NEWS” related to women’s apparel, not news and information.  Because the words “Newport News” were completely arbitrary to the market of women’s apparel, the mark actually is a strong one.  Defendant’s big problem was changing the use to overlap with the women’s apparel trademark.