Has Your Bag of Trademark Tricks Grown Larger? District Court Recognizes Novel Causes of Action in Cybersquatting Case: Microsoft Corp. v. Shah (W.D. Wash. Jan. 12, 2011)

Has Your Bag of Trademark Tricks Grown Larger? District Court Recognizes Novel Causes of Action in Cybersquatting Case: Microsoft Corp. v. Shah (W.D. Wash. Jan. 12, 2011)

Plaintiffs may bring novel causes of action for contributory cybersquatting and for contributory trademark dilution, according to a recent ruling from the U.S. District Court for the Western District of Washington. In so ruling, the district court refused to narrowly read the Anti-Cybersquatting Consumer Protection Act (ACPA) and deemed contributory dilution consistent with the Trademark Dilution Act.

In Microsoft Corp. v. Shah, 2011 U.S. Dist. LEXIS 2995 (W.D. Wash. Jan. 12, 2011) [enhanced version available to lexis.com subscribers], Microsoft sued defendants who had allegedly registered domain names containing Microsoft  trademarks in order to drive traffic to their website. Defendants were also alleged to have induced others to engage in infringement and cybersquatting by providing instruction on how to misleadingly use Microsoft marks to increase website traffic.  

The district court recognized Microsoft's cause of action for contributory cybersqatting, couching it in the ACPA's framework, which required the additional element of bad faith; particularly, a "cyber-landlord's" knowledge that vendors were illegitimately utilizing the marketplace for domain names. The district court held that:

In essence, the contributory cybersquatting claim alleges that Defendants induced others to use domain names incorporating Microsoft marks. Defendants did not simply provide a marketplace where a trade in domain names may take place, as was the case in Ford [Ford Motor Co. v. Great Domains.com, Inc., 177 F. Supp. 2d 635 ( E.D. Mich. 2001) [enhanced version]]. Rather, Defendants allegedly developed and marketed a method, the sole purpose of which was to allow purchasers to profit from the illicit use of Microsoft marks. Unlike the defendant in Ford, the Defendants in the case at hand either knew or should have known that the purchasers of the "Magic Bullet System" could not have had a legitimate reason for purchasing the method. Therefore, it is likely that Plaintiff has made a sufficient showing of Defendants' bad faith under the heightened standard employed by the Ford court.

The district court also recognized a cause of action for contributory trademark dilution. The district court stated:

contributory dilution is a tort-like cause of action which naturally lends itself to the theory of contributory liability. In the case at hand, Defendants are alleged to have encouraged others to utilize the famous mark in such a way that could cause dilution of the Microsoft mark. The Trademark Dilution Act seeks to provide a mechanism through which owners of famous marks may seek protection against exactly the kind of harm - in the form of blurring or tarnishing - that is alleged in the present case. It would be inconsistent with the Trademark Dilution Act to prohibit a cause of action for contributory dilution.