We are often asked with Registrars are liable for cybersquatting, domain theft, trademark infringement, negligence in failing to process domain registrations and other issues. Under the Anti-Cybersquatting Consumer Protection Act, registrars have some protection from cybersquatting allegations, but they are not absolute. Registrars such as GoDaddy who offer parking solutions for themselves and their registrants can be held liable under the ACPA.
Second, the ACPA contains liability limitations for domain name registrars, but they are limited and not clearly applicable to this case. Registrars are not liable to registrants for removing, transferring, disabling or cancelling a registration at the request of a trademark owner. Another part of the ACPA, also found within the Limitation on Liability section (codifed at 15 U.S.C. 1114), actually seems to support -- rather than defeat -- the plaintiff's claim: It reads:
A domain name registrar, registry, or other registration authority shall not be liable for damages under this section for the registration or maintenance of a domain name absent a showing of bad faith intent to profit from such registration or maintenance of the domain name.
The lawsuit would seem to turn on whether or not GoDaddy is acting in "bad faith." It could be liable as a cybersquatter if it used or trafficked in domain names similar to the plaintiff's marks -- if it did so in bad faith. Moreover, it is not entitled to claim the liability limitations in 15 U.S.C. 1114 if it acted in bad faith. "Bad faith" is defined according to an eight-factor test, which I won't go into here. As far as I can see, it doesn't cut clearly in favor or against GoDaddy.