A Federal Court has held that Godaddy.com was not liable to a trademark holder although the domain was being “forwarded” by Godaddy to the registrants hosting company.

The case is of Berhad v. GoDaddy,  and the decision was handed down by the Northern District of California on Jan. 3, 2012.

We will let the court describe the facts of the case and its findings.

Having read through the 20 page opinion I would say the court came to the right conclusion and the Plaintiff simply went well in the wrong direction suing the domain name registrar rather than registrant in federal court.  We also have to applaud Godaddy for defending this case, which you can tell from the opinion was not cheap, rather than caving in to the demand of the Plaintiff.

Here is the court statement of the Facts:

“This is a case brought under the Lanham Act, alleging cybersquatting and contributory cybersquatting, and also alleging state law claims of unfair competition. Plaintiff Petroliam Nasional Behad (“Petronas”) is the national oil company of Malaysia, and is wholly-owned by the Government of Malaysia. (Its official website is www.petronas.com.my).”

“Petronas asserts that two domain names,  www.petronastower.net and www.petronastowers.net (the “Disputed Domains”),  which were registered by Go Daddy, were used by one or more non-parties to violate its trademark rights by cybersquatting.”

“Petronas seeks to hold Go Daddy liable for cybersquatting and for contributory cybersquatting, on the basis that the non-party registrant used Go Daddy’s automated systems to point the domain names to a pornographic website that was hosted elsewhere.”

“The court noted that a registrant of a domain name can configure the nameserver so that it routes either to a “record not found” error message, or to a newly created website on a server hosted by the registrar or some third party, or to an existing website already associated with another domain name. This last form of routing is referred to as “domain name forwarding.”

“In May 2003, a third party registered two domain names, www.petronastower.net and www.petronastowers.net (the “Disputed Domains”), with the domain registrar eNom.com (“eNom”), and also pointed – or “forwarded” – the Disputed Domains to a preexisting website featuring pornography.

“For most of the time between May 29, 2003 and November 11, 2006, at least one of the Disputed Domains was directed to a website displaying pornography. On April 1, 2007, the then-registrant – Heiko Schoenekess – changed registrars from eNom to Go Daddy.”

Schoenekess used Go Daddy’s online “dashboard” to automatically forward the Internet traffic for the Disputed Domains to the same pornographic website with which they had previously been associated.

“It was not until November 26, 2009 that Petronas learned that the domain name petronastower.net had been registered with GoDaddy.com, by a third party. Petronas asserts that it immediately advised Go Daddy of the unauthorized use of the “petronastower” name, and requested that Go Daddy cease its “direct and contributory infringement” of Petronas’ mark.”

“Go Daddy responded on November 30, 2009, stating that it would not tolerate illegal content on its customers’ websites, and would cooperate with law enforcement to get any such websites taken down.”

“Go Daddy further informed Petronas that any disputes over the ownership or wording of the domain name itself will need to be sent to either the registrant, through an arbitration forum such as World Intellectual Property Organization . . . or the local court system.”

“Per ICANN regulations, domain registrars are prohibited from becoming involved in domain ownership disputes.”

“Nevertheless, instead of utilizing an arbitration procedure, which it had successfully used previously, Petronas submitted a trademark claim to Go Daddy on December 16, 2009.”

“Go Daddy informed Petronas, the UDRP specifically prohibits registrars from becoming involved in disputes over domain name ownership.”

“During the following two weeks, Petronas continued urging Go Daddy to disable the domain name and website.”

“On December 18, 2009, Petronas filed the present action. Petronas subsequently filed an in rem action against Petronastower.net (No. C-10-0431), and on May 13, 2010, the court granted Petronas’ motion to transfer ownership of the domain name. Final judgment was entered in that case on June 14, 2010. In July 2010, Petronas discovered that the domain name petronastowers.net had also been registered with Go Daddy by a third party, and was set to forward to a website that was located elsewhere.”

“Just as before, counsel for Petronas submitted a trademark claim to Go Daddy, and included a copy of Go Daddy’s policy stating that domain name disputes were governed by the UDRP. Again, Go Daddy immediately responded that issues regarding the content of the transferee website had to be addressed with the owner of the website or the hosting provider.”

“Go Daddy reiterated that it was prohibited by ICANN and the UDRP from getting involved in such disputes.”

“On July 12, 2010, Petronas filed a second in rem action (C-10-3052) against Petronastowers.net, and a motion to transfer ownership of that domain name. The motion was granted on August 27, 2010. Final judgment was entered in that case on September 9, 2010. Meanwhile, Go Daddy had moved for judgment on the pleadings in the present.”

“On September 29, 2010, Petronas filed a first amended complaint (FAC), asserting three causes of action – (1) cybersquatting, in violation of 16 U.S.C. § 1125(d) (the Anticybersquatting Consumer Protection Act or “ACPA”); (2) contributory liability for cybersquatting; and (3) unfair competition, under California Business & Professions Code § 17200 and California common law.”

“Go Daddy seeks summary judgment on the claim of direct cybersquatting.”

“Cybersquatting” is the bad faith registration of a domain name that is identical or confusingly similar to another’s distinctive mark.”

“The ACPA establishes civil liability for “cyberpiracy” where a plaintiff proves that (1) the defendant registered, trafficked in, or used a domain name; (2) the domain name is identical or confusingly similar to a protected mark owned by the plaintiff; and (3) the defendant acted “with bad faith intent to profit from that mark.”

“Go Daddy argues that there is insufficient evidence for a reasonable juror to find for Petronas on element (1) or element (3). Go Daddy also asserts that the cybersquatting claim fails as a matter of law because the ACPA provides domain name registrars with a clear “safe harbor” from liability for registration or maintenance of a domain name for another, absent a bad faith intent to profit from such registration or maintenance of the domain name.”

“Go Daddy notes that it is undisputed that it was Heiko Schoenekess, not Go Daddy, that was the registrant of the Disputed Domains.”

“Go Daddy contends that as a registrar, its role was limited to providing the infrastructure for the registrant to route the Disputed Domains automatically to a website of his own choosing, which is not the type of illegitimate use contemplated by the statute.’

“Petronas points to Go Daddy’s form agreement with the registrant (Go Daddy’s “Universal Terms of Service”), pursuant to which the registrant granted Go Daddy the “right to terminate [the registrant’s] access to Services at any time, without notice, for any reason whatsoever.” Under the agreement, “Services” included “using our systems to forward a domain, URL, or otherwise to a system or site hosted elsewhere.”

“Petronas also cites to the deposition testimony of one of Go Daddy’s designated witnesses, claiming that the witness testified that she was unaware of anything in any of the agreements between Go Daddy and the registrant of the domain names petronastower.net and petronastowers.net that would have prevented Go Daddy from stopping its domain name forwarding service for those domain names.”

“Based on this, Petronas asserts that Go Daddy’s agreements with the registrant granted it a license to freely use the Disputed Domains in connection with the domain name forwarding service and to continue or discontinue the service based on Go Daddy’s own independent decision. ”

“Go Daddy argues that there is no evidence in this case that it acted with an intent to profit, as it  does not charge registrants for utilizing domain name forwarding as a means of routing their domain names, and it did not profit from the registrant’s use of the forwarding service to route the Disputed Domains to a website hosted by a third party.”

The Court held that:

“”The fact that the registrant forwards the domain name through Go Daddy’s systems does not create a reciprocal license for Go Daddy to use the registrant’s domain names. ”

“Finally, there is no evidence that Go Daddy had a bad faith intent to profit from Petronas’ mark. The fact that the forwarding service was based on customer demand does not show intent to profit specifically from Petronas’ mark, and, in addition, is based on a flawed premise – that Go Daddy profited from customers using its forwarding service.”

“As Go Daddy did not charge for the forwarding service, it cannot be said to have profited from it. Moreover, Petronas’ argument that Go Daddy sought to profit by establishing immunity from liability is entirely untenable.”

On the claim for Contributory cybersquatting the court ruled as follows:

“In the Ninth Circuit, one is liable for contributory trademark infringement when he has knowledge of another’s infringement, and either materially contributes to or induces that infringement. Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788, 795 (9th Cir. 2007)”

“In addition, the existence of direct infringement is a necessary element of a claim for contributory infringement. Perfect 10, 494 F.3d at 795; ”

“Go Daddy argues that it did not have any knowledge that the registrant was cybersquatting, and there are no “special circumstances” that would justify imputing to Go Daddy knowledge that the registrant registered the Disputed Domains with a bad faith intent to profit from Petronas’ mark. Go Daddy contends that a registrar is not normally expected to ascertain the good or bad faith intent of its registrants, and that it is well established that a demand from a trademark owner is not sufficient to cause such knowledge to be imputed. More to the point, Go Daddy asserts, discovery has closed, and Petronas has obtained no evidence to establish that the registrant had the necessary bad faith intent to profit from Petronas’ marks in registering the Disputed Domains, which is required to establish direct cybersquatting on the part of the registrant.”

“The court finds that Go Daddy’s motion must be GRANTED and Petronas’ motion must be DENIED.”

“A claim for contributory cybersquatting does not exist under the circumstances of this case, as a company providing an Internet routing service does not exercise the type of direct control and monitoring that would justify recognition of a contributory infringement claim.”

“Based on the evidence presented, the court is satisfied that the service at issue here – domain name forwarding – is a form of routing.”

“Permitting a contributory cybersquatting claim based on a forwarding service cannot be squared with the Ninth Circuit’s rejection of such a claim based on the same conduct in the context of traditional trademark infringement (as opposed to cybersquatting). ”

“Further, Go Daddy did not exercise “direct control and monitoring” over the alleged cybersquatting.”

“Domain name registration and routing are services routinely provided by registrars, and cannot be considered the type of direct control over the use of the mark that is required for the application of secondary liability principles.”

“There is no evidence that Go Daddy had any control over the registrant when he registered the Disputed Domains, or when he used the forwarding service. What is most significant, however, is that Petronas’ evidence is inadequate to  establish cybersquatting by the non-party registrant.”

“In particular, there is no evidence that can establish the registrant’s “bad faith intent to profit” from Petronas’ mark.”

“Arguably, the fact that the registrant arranged to have Internet traffic directed from the Disputed Domains to a pornographic website is sufficient to show some variety of bad faith.”

“However, the record is silent as to the intent of the registrant,  that is, there is absolutely no evidence of bad faith intent to profit from Petronas’ mark.”

“It is not enough to say that one can “infer” a bad faith intent to profit, even were such an inference sufficient to establish that element of the claim. One could just as easily infer a bad faith intent to create mischief, or a bad faith intent to annoy the owner of the Petronas mark. Because Petronas has failed to present evidence sufficient to support all the statutory elements of a claim of direct cybersquatting, it cannot show that Go Daddy engaged in contributory cybersquatting.”