Ford Plays Neighborhood Bully With Domain Name Holders
By Shelley M. Liberto, Esq. (firstname.lastname@example.org)
This spring, Ford Motor Co. sued the holders of 185 domain names in federal court in Michigan claiming violations of the Anti-Cybersquatting Consumer Protection Act and for trademark infringement. See article in the April 2000 issue of WWWiz.
The primary defendant is domain name auctioneer GreatDomains.com, which was featured in the June 2000 issue of WWWiz. Ford has targeted GreatDomains.com for hosting the sale of the various defendant domain names, all of which were posted on GreatDomains.com, because the names are allegedly the same as, or bear a confusingly similar resemblance to, automobile related trademarks.
Ford's overly broad use of litigation as a means of attacking competitive domain names, however, has unfairly included some names of dubious liability such as ``FordSucks.com," ``StangStuff.com," and ``FordChevyRacing.com."
To avoid sustaining a default judgment against them, each of the 185 domain name holders have been requested to pay $3,000 to Ford's attorneys and relinquish ownership of the respective domain names to Ford. Many of the domain name holders, some of whom reside in locations as far away as New Zealand, cannot afford to hire local attorneys in Michigan to defend their domain name rights. They have therefore complied with Ford's demands without enjoying their day in court.
GreatDomains.com as Defendant
The status of GreatDomains.com as a Web site that hosts the auctioning of domain names is unique to the law. Domain name ``auctioneers" are not accounted for in the Anti-Cybersquatting Act or trademark law. GreatDomains.com is also unique as a defendant in the Ford action. GreatDomains.com has not been sued as the owner of an infringing name. The Anti-Cybersquatting Act protects ``a domain name registrar, a domain name registry or other domain name registration authority" on the theory that these entities operate as a mere ``conduit" of information and should not be held liable for the acts of their customers or registrants.
GreatDomains.com seeks to avoid liability in the Ford action based on the policy behind this clause although the Anti-Cybersquatting Act does not clearly or explicitly protect entities in GreatDomains.com's position. This is so because GreatDomains.com does not neatly fit within the class of protected parties. A legal analysis of the liability of the domain name holders themselves is less perplexing.
The Integrity of Ford's Claims
Ford's commercial intent in instituting mass litigation against individual domain name holders immediately comes under scrutiny because of the broad range of names involved, infringing or not, and the blanket $3,000 demand. Fundamentally, Ford must prove that, under the Anti-Cybersquatting Act, the owner has a bad-faith intent to profit from a domain name that is identical or confusingly similar to the mark. Likewise, under the Trademark Act of 1941, no violation occurs unless the defendant uses an identical or confusingly similar mark that would cause reasonable consumers to believe that the user of the mark is affiliated with the owner.
Because all of the domain names were posted for auction on GreatDomains.com, Ford has satisfied the element of intent to profit from the sale or use of the domain name. Ford must therefore litigate whether a particular domain name would lead a reasonable consumer to believe that it is dealing with Ford Motor Co. rather than someone else.
As a first step, Ford succeeded in forcing the Internet service providers of the challenged domain names to disable the names. This was an administrative event that was, in and of itself, enough to terminate the business of some of the domain names regardless of the legitimacy of the claims against them. In accordance with the requirements of the Trademark Act, domain name registrar Network Solutions, for example, has frozen the 57 of the 185 names it hosts by forbidding any change to the status of the names or transfer of ownership without court order. This protects Network Solutions from being sued as a defendant for ``contributory" infringement. The owner is thereby deprived of any value that could be derived from the sale of the domain name, and control over its status, unless it hires local attorneys, files an answer to the Ford action and appears in court in Michigan to obtain relief. Faced with these alternatives, many of the domain name holders have simply chosen to pay the $3,000 and turn over ownership of the name to Ford Motor Co. whether or not they are liable.
Some of the domain names do seem to fall into the category of liability: The-Ford-Motor-Company.com, FordCare.com, and Ford-dealer.com. On the other hand, filing suit against obviously non-infringing names such as FordSucks.com appears to be motivated by a desire to terminate an enterprise that is potentially commercially dangerous to Ford, although no reasonable consumer would believe the name is sponsored by Ford.
FordSucks.com, like other parody and free speech Web sites, would have been an ideal name for a Web site that operates as a forum for an exchange of information critical of the company. Indeed, such a Web site might have operated as a useful tool for garnering evidence with regard to the current Firestone tire issue that has spawned so much criticism of Ford's handling of bad publicity. Perhaps unfortunately for consumer advocacy groups and champions of free speech, FordSucks.com gave in to Ford's demand and paid the $3,000 settlement payment, rather than spend money on costs and attorneys' fees to defend its rights in Michigan. Now that Ford owns FordSucks.com, that domain name is sure to be shelved indefinitely, although it would likely have sold on GreatDomains.com for at least several thousand dollars.
As a general marketing tactic, therefore, the filing of a lawsuit against 185 domain name holders, many on dubious grounds, appears to have been a successful one for Ford. At the rate of $3,000 each, Ford's attorneys could reap a settlement total of more than a half million dollars. Including settlement monies from those domain name defendants who are obvious infringers, the result could be higher. On the other hand, the rank injustice of exploiting the financial incapacity of distant defendants to advance an unethical marketing tactic offends the sense of common fairness that most people feel should be protected by the legal system. A San Francisco Web advocacy group is accepting the challenge.
The Electronic Frontier Foundation Takes on Ford
The Electronic Frontier Foundation is a California nonprofit public benefit corporation that aims to protect essential civil liberties on the Web. The EFFwas founded in July, 1990, with one of its objectives to integrate the protections of the Bill of Rights into new communications technology as it emerges. The EFF maintains a legal department, staffed by attorneys, that has participated directly in litigation, and appears amicus curae in cases that it deems important to civil liberties on the Web. The EFF also provides pro bono representation in cases consistent with its mission when parties cannot afford their own representation.
Cindy Cohn, Esq., is the legal director of the EFF. On behalf of the EFF, Cohn is in the process of organizing a collective pro bono defense of the Ford action for defendants who cannot afford their own counsel. As of this time, the EFF appears to be the entity that is best apprised of defense efforts in this action. Cohn can be reached at Cindy@eff.org.
Ford's Action Could Backfire
The present stage of litigation in the Ford action is preliminary, with motions to dismiss now being entertained by the court on an individual basis. Regardless of the outcome, serious questions have been raised as to the fairness of the litigation process in resolving domain name disputes. Notwithstanding attempts to integrate alternative dispute resolution procedures, behemoth plaintiffs such as Ford still maintain the ability to prevail against the fair use of its name, now an American institution, in whatever form it appears.
Ford's use of litigation as a marketing tactic also speaks ill of a federal court system that can be so easily manipulated against the legitimate interests of defendants of modest means. On the other hand, the Ford action has at the same time called into play the direct participation of at least one Web advocacy group. This may be the most publicly beneficial result of the lawsuit and, in time, may prove to be more of a detriment to Ford's marketing plans than the benefits it anticipated when it filed the lawsuit in the first place.
Shelley M. Liberto is an attorney whose practice focuses on software and Internet-related issues. His Web site is located at http://www.libertolaw.com.
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