In a 29 page ruling a California Federal Court denied Godaddy’s motion to have the case filed by the ACADEMY OF MOTION PICTURES ARTS AND SCIENCES, (the Oscars) which was filed in 2010, thrown out, denying Godaddy.com the Safe Harbor that domain name registrars typically enjoy.

DomainNameWire.com reported last week that Godaddy was testing out some new parked landing pages, but this ruling might explain why Godaddy made the change removing pay per click traditional parked page advertising.

Of course since most registrars use or have used pay per click parking to generate ad revenue on expired domain names and placeholder domain names its a huge issue for all registrars.

The Academy is suing GoDaddy for Violation of the Anticybersquatting Consumer Protection Act (“ACPA”),and Contributory Cybersquatting.

Basically the The Academy claims that, through GoDaddy’s Parked Pages Service GoDaddy has monetized or attempted to monetize, and therefore “used” and “trafficked in,” domain names that are identical, confusingly similar, and/or dilutive of five of the Academy’s trademarks, with bad faith intent, in violation of the ACPA.

In denying Godaddy’s Motion for Summary Judgement District Court Judge Audrey B. Collins wrote in part:

“The Academy also argues that, as a matter of law, GoDaddy is not entitled to ACPA’s safe harbor provision for domain name registrars.”

That provision creates immunity for “[a] domain name authority” from claims for damages “for the registration or maintenance of a domain
name for another absent a showing of bad faith intent to profit from such registration or maintenance of the domain name.”

As the Court noted in its September 20, 2010 Order resolving GoDaddy’s Motion to Dismiss, this provision shelters only those registrars acting solely in the “registration” or “maintenance” capacity; registrars are not immunized from liability for conduct that goes beyond mere registration and maintenance of domain names.:

GoDaddy argues that the safe harbor provision “appl[ies] to at least some of GoDaddy’s alleged conduct.” But, the Academy stresses that its motion “is limited to the activity related to the Parked Pages Program.” The undisputed facts show that, with regard to its operation of the Parked Pages Program, GoDaddy does not function solely as a registrar.

First, the Parked Pages Program applies to pages already registered with GoDaddy, indicating that GoDaddy has fulfilled its registration role by the time it implements the parking programs.

The Parked Pages Program is distinct from GoDaddy’s registrar function.

Second, through its Parked Pages Program, GoDaddy uses its servers to create webpages for registered domain names, and to place advertising on those pages for which it can collect a fee-per-click.

Creating webpages, placing ads, and collecting ad revenue is not registration activity.

GoDaddy contends that it is still entitled to safe harbor protection because the Academy has not shown that it has in fact received revenues from ads placed on webpages resolved from the accused domain names. This position is unavailing. The safe harbor provision immunizes only (1) registration or maintenance, (2) “absent a showing of bad faith intent to profit.” The safe harbor provision simply does not apply to conduct, like operating the Parked Pages Program, that goes beyond mere registration and maintenance.

Furthermore, a registrar’s mere bad faith intent to profit – as opposed to actual profit – is sufficient to disqualify it from safe harbor protection.

For these reasons, GoDaddy is not entitled to the safe harbor provision of § 1114(2)(D)(iii) for its Parked Pages Program.

The Parked Pages Program creates webpages from which GoDaddy can generate advertising revenue. When an internet user attempts to access a domain name in GoDaddy’s Parked Pages Program for which the registrant has not specified a different server, GoDaddy’s parked page servers create an ephemeral webpage with paid advertising links.

GoDaddy receives revenue any time a user clicks an advertisement on those parked pages.

This is “use” within the meaning of the APCA.

The ACPA defines “trafficking in” to mean “transactions that include, but are not limited to, sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for consideration or receipt in exchange for consideration.”

As discussed above, through the DNRA, GoDaddy’s registrants granted GoDaddy a license to place ads on their parked webpages and retain the resulting revenue. GoDaddy is therefore an authorized licensee of its registrants, and therefore is involved in “transactions that include . . . licenses. . .” GoDaddy therefore traffics in those domain names as to which it is an authorized licensee.

In any event, GoDaddy’s legal argument is not convincing.

As the Court understands it, GoDaddy’s argument is that, unless a domain name in its Parked Pages Program is actually resolved to a parked webpage (which happens when an internet user enters that domain name into an internet browser), and an internet user actually clicks on an ad to create revenue for GoDaddy, GoDaddy has not “used” the domain name.

In the Court’s view, by placing domain names in the Parked Pages Program, GoDaddy has acted affirmatively and done something with the domain names other than mere passive registration or routing: GoDaddy placed the domain names in a program it designed to make revenue. This is sufficient to establish “use” even absent actual monetization.

As for trafficking, ACPA requires only that a defendant have engaged in a transaction that includes a license and consideration; it is undisputed that in exchange for consideration, GoDaddy received from registrants a license to place revenue-generating ads on webpages resolved from domain names in its Parked Pages Program.

This is sufficient to constitute “trafficking” even absent actual monetization. If any accused domain name has not been visited by an internet user or did not generate actual revenue for GoDaddy, that may go to damages, but not to liability.

Finally, GoDaddy’s contention that it is merely routing domain names is unsupported by the facts.

Through its Parked Pages Program, GoDaddy creates and hosts websites to which the accused names resolve, and places revenue-generating advertisements thereon.

The evidence is likely to bear on whether the above-referenced domain names were routed to GoDaddy’s parked page server and whether advertisements were placed on the parked pages.

GoDaddy argues that it cannot be liable for contributory cybersquatting based on its operation of the Cash Parking Program because there is no evidence that registrants of the disputed domain names actually used GoDaddy’s “name spinning technology” when they registered the names.

The Academy does not have to prove that a registrant actually relied on GoDaddy’s “name spinning technology” to select an accused domain name, because that technology is not the only way in which GoDaddy is accused of “induc[ing]” infringement or “suppl[ying] a product [or service] to a third party. . .” For example, GoDaddy’s Cash Parking Program may be said to “induce” infringement, independent of the name spinning technology, because it offers potential registrants the opportunity to monetize an infringing name even where the name spinning technology does not provide the name.”

“In addition, GoDaddy supplies a service that the registrants use for their alleged direct cybersquatting because GoDaddy creates the parked webpages and
places advertisements on them. Nor must the Academy depose each and every registrant to determine his or her bad faith intent to profit because intent may be inferred from other evidence. Accordingly, this aspect of GoDaddy’s Motion is:
DENIED”

“For the foregoing reasons, the Court rules as follows:
• Domain names that the Academy disclosed after September 14, 2011 are not at issue.
• The Academy’s marks are distinctive; whether the Academy’s marks are famous is a triable issue of fact.

• GoDaddy is not entitled to 15 U.S.C. § 1114(2)(D)(iii)’s safe harbor.

• As to whether GoDaddy’s conduct constitutes “using” and “trafficking in” domain names:
• GoDaddy is an “Authorized Licensee” for purposes of ACPA liability.

• GoDaddy “uses” and “traffics in” domain names in its Parked Pages Program.

• The Court defers ruling on whether the accused domain names are in the Parked Pages Program

The Court defers ruling on whether the accused domain names are “confusingly similar” to the Academy’s marks.

• GoDaddy is not liable under ACPA as a registrant

• ACPA’s “dilutive” prong does not require actual dilution.

• GoDaddy’s Motion for Summary Judgment is DENIED