When the defendant is a domain name: the power of in rem proceedings under the ACPA

A recent decision by a federal court in Virginia illustrates some interesting legal issues that arise from the global nature of the domain name system. It also highlights a powerful mechanism under the Anticybersquatting Consumer Protection Act (“ACPA”) by which a plaintiff can proceed with a legal action to recover a domain name without regard to the court’s personal jurisdiction over the registrant.

In June of 2003, Junak Kwon registered the domain name nbcuniversal.com through a registrar in Korea. NBC Universal, Inc. filed suit in the U.S. District Court for the Eastern District of Virginia – the district in which the registry for the .COM TLD is located – to recover the domain name. NBC Universal alleged violation of the ACPA (15 U.S.C. §1125(d)), and alleged other claims under federal trademark law, namely, that Kwon’s registration of the domain name diluted NBC Universal’s mark.

NBC Universal’s lawsuit was an in rem action, a type of action provided for under 15 U.S.C. §1125(d)(2) which allows, under certain circumstances, a plaintiff to proceed directly against a domain name to enforce ownership rights in it. The court had allowed NBC Universal to proceed in this manner because it would not have been possible for the court to obtain personal jurisdiction over the registrant.

Kwon filed a motion to dismiss which presented three arguments, each of which the court rejected. First, Kwon argued that the court was without subject matter jurisdiction over the case. He contended that by filing a prior proceeding with the World Intellectual Property Organization (“WIPO”) pursuant to the Uniform Domain Name Dispute Resolution Policy (“UDRP”), NBC Universal had submitted to the jurisdiction of the legal system in Korea, where the domain name was registered.

In rejecting Kwon’s argument based on lack of subject matter jurisdiction, the court cited the case of Barcelona.com, Inc. v. Excelenstisimo Avuntamiento de Barcelona, 330 F.3d 617 (4th Cir. 2003), which held that arbitrating a dispute pursuant to the UDRP does not preclude a plaintiff form filing a civil suit, either before or after the arbitral proceeding. The court further noted that a plaintiff is not limited to bringing such an action in the jurisdiction to which it submits for purposes of the WIPO proceeding. Accordingly, the previous WIPO proceeding did not deprive the court of subject matter jurisdiction.

Kwon’s second argument was that the U.S. court should abstain from exercising jurisdiction over the matter, because Kwon had already filed an action in Korea challenging the WIPO panel’s ruling that was adverse to him. The court observed that abstention is only warranted in “extremely rare circumstances,” and concluded that such circumstances were not present in this situation. The court found that principles of international comity would not require the court to abstain, because the Korean court action had “not been initiated in any meaningful sense.” The defendant had not yet been served with process, and the Korean action was an in personam action against NBC Universal (as opposed to an in rem action against the domain name itself, as this case was).

Kwon’s third argument was that the in rem provisions found at 15 U.S.C. §1125(c)(2) provided for such an action only over cybersquatting claims. Therefore, Kwon argued, adjudication of NBC Universal’s dilution claim would require the court to acquire personal jurisdiction over him, and both sides had agreed that the court could not acquire personal jurisdiction. The court quickly dispensed with this argument, however, citing to the case of Harrods Ltd. v. Sixty Internet Domain Names, 302 F.3d 214 (4th Cir. 2002), which held that “the in rem provision [of the Lanham Act] not only covers bad faith claims under §1125(d)(2), but also covers . . . dilution claims under §1125(c).”

NBC Universal, Inc. v. NBCUNIVERSAL.COM, — F.Supp.2d —, 2005 WL 1712887 (July 14, 2005).